Lakshdeep had submitted a Rs 7,000 crore resolution plan. This involved Rs 1,000 crore in upfront cash payment, conversion of some of Jaypee Infra’s debt into equity, and offering lenders some land parcels in exchange for reducing the outstanding debt.
Lenders, however, were not comfortable with some of the conditions and covenants attached to the resolution plan, said the people quoted above. One such condition was that lenders would have to pay Lakshdeep a management fee to develop the land that the banks were being offered in lieu of debt. Some lenders were also of view that the price at which the land was being offered was very low, said one of the two people quoted above.
Last month, the lenders had finalised Lakshdeep as the highest bidder for Jaypee Infratech, after months of negotiations. Since then IDBI Bank and SBI have led the negotiations.
The lenders’ decision to reject the Lakshdeep plan will now be presented to the Supreme Court, which is hearing a petition by home buyers who are fighting to get possession of units at a residential project developed by Jaypee Infratech. The Supreme Court is scheduled to hear the matter on Friday.
With the Lakshdeep resolution plan rejected, lenders have the option to negotiate a resolution plan with the erstwhile promoter of Jaypee Infratech – Jaiprakash Associates Ltd. The company had made an offer worth Rs 10,000 crore, outside the IBC bidding process.
Jaiprakash Associates’ plan also consists of some upfront cash payment, conversion of debt to equity and giving land to banks in lieu of reducing debt. In the past, ICICI Bank and Axis Bank have both entered into similar arrangements with Jaypee Infra where debt has been cut by taking over land.
Lenders, however, are yet to vote on this plan. According to the people quoted above, the plan will be considered only after the Supreme Court and the NCLT give their approval to the creditors.
It is unclear whether Jaiprakash Associates is well positioned to make good on the resolution plan. In September 2017, the Supreme Court had asked the company to deposit Rs 2,000 crore as security against dues of homebuyers but the company is yet to deposit that amount fully.