“All banks are now in the process of taking board approvals to consider the NARCL offer. Meanwhile, the Swiss challenge process will also start to get the best value quickly,” said a person familiar with the plan. “Banks are of the view that given the delays in resolution of this account, it is better to consolidate the debt with NARCL and allow it to complete the resolution.”
The NARCL offer is at less than half of the Suraksha ARC’s offer of ₹7,936 crore and amounts to 84% haircut on the total debt.
But lenders expect consolidation of the account with NARCL will insulate them from the delays and volatilities of the process that has no certainty on closure.
NARCL will have the right to match any counteroffers in the Swiss challenge.
Jaypee Infratech, a real estate and infrastructure company, was among the initial 12 entities Reserve Bank of India (RBI) had referred to the National Company Law Tribunal (NCLT) in August 2017 under the Insolvency and Bankruptcy Code (IBC).
Lead lender IDBI’s petition was admitted more than five years ago and since then, the resolution has seen four rounds of bidding and various litigations frustrating both lenders and homebuyers.
In June 2021, the Committee of Creditors, through a court-monitored process finally approved Suraksha ARC’s bid to take over the distressed borrower. However, more than a year later, that plan is yet to receive the dedicated bankruptcy court’s approval.
“If you look at it, the NARCL offer also does not include the illiquid land and non-convertible debentures (NCDs) that were part of the Suraksha offer. So, in that sense it is a better deal for banks,” said another person aware of the plan.
Suraksha ARC had offered 2,500 acres of land and nearly ₹1,300 crore by way of issuing NCDs as part of its winning bid in 2021.
NARCL’s offer is a combination of 15% upfront cash payment and the balance as security receipts (SR) guaranteed by the government according to the special dispensation given to this entity by RBI.
If no counteroffer comes up in the Swiss challenge round, then NARCL will automatically be declared the winner.