Jaypee Infratech insolvency case: What homebuyers should do

With Allahabad Bench of National Company Law Tribunal (NCLT) declaring Jaypee Infratech as an insolvent company, there is a bedlam amongst home buyers. Whether these home buyers who have invested their lifelong earnings will get their homes or not despite waiting for so many years.

On Wednesday, the NCLT has admitted the petition of IDBI Bank to fast track the resolution process of Jaypee Infratech's Rs 526.11 crore debt default under the provisions of Insolvency and Bankruptcy Code, 2016. Flat buyers can present their claims till 24th August as two weeks have been provided for this purpose.

The tribunal has appointed Anuj Jain as interim professional to revive the company in six months which can be extended maximum for three more months and after that, the assets of the company will be sold off to recover bank's money. The project which has yet not been completed include 800 acre Wish town project in Sector 128 of NOIDA. The wish town has over 32,000 apartments. Of these, just 5,500 have been delivered.

While the law allows for liquidation if no plan is worked out within 270 days (including a 90-day extension), banker asserted that the idea is to work out the revival plan since a real estate scheme with thousands of home buyers cannot be treated in the same manner as steel or power plant.

What home buyers can do- Home Buyers can raise till claims till 24th August pertaining to their investment in Jaypee Project. This implies that the homebuyers will have to provide details of the amount they have paid to the builder in the prescribed form. In case, the company fails to revive than the total amount that has to be paid back to the homebuyers will be calculated as per the details furnished by them.

It is pertinent to note for homebuyers, that they cannot file cases in different courts for recovery of their money, nevertheless, their right to get the allotted house does not get diluted.

Till the restructuring exercise is completed, all the claims in any other court, all orders of compensation against the company will be dealt by NCLT. Any recovery proceeding will also be suspended or transferred to NCLT.

Repercussions if the company is unable to revive-If the company fails to cope up during this stipulated period, the company's assets will be liquidated and sold to recover the money. The money will first go to secured creditors such as banks and the remaining money will then be distributed among the unsecured creditors such as home buyers, contractors etc. This is a unique case as the interest of thousand of home buyers are involved. The committee of the creditors (liquidators) will replace the board of directors who will aim at reviving the company by restructuring its debt.

We at LawRato have some of the best lawyers for delayed possession cases or in Jaypee insolvency and delay matter.