10-July-2019
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10-July-2019 CREDAI Bengal Daily News Update | 10.07.19 Newspaper/Online ET Realty (online) Date July 10, 2019 Link https://realty.economictimes.indiatimes.com/news/regulatory/financial- creditor-status-given-to-protect-buyers-interest-centre-to-sc/70151622 Financial creditor status given to protect buyers’ interest: Centre to SC The real estate companies have challenged validity of section 5(8)(f) of the Insolvency and Bankruptcy Code 2016 which ensures inclusion of home buyers as financial creditors under the code. Backing the homebuyersin their fight against builders which duped them and facing insolvency proceedings, the Centre on Tuesday told the Supreme Court that there was no illegality in amendment brought by it in Insolvency and Bankruptcy Code(IBC) to give them a say in the proceedings by classifying them as financial creditors like banks. Responding to a batch of more than 140 petitions filed by different real estate companies challenging constitutional validity of the amendment in IBC, the Centre filed its affidavit in the apex court and said that the law was amended to protect the interest of lakhs of home buyers who had invested their hard earned money to purchase flats but were cheated by the companies. It said that amendment was brought after the apex court itself had in 2017 expressed concern over the plight of homebuyers and had said that they should be represented in the Committee of Creditors under IBC. The real estate companies have challenged validity of section 5(8)(f) of the Insolvency and Bankruptcy Code 2016 which ensures inclusion of home buyers as financial creditors under the code. The Centre, however, said that amendment was brought to insert an explanation to the definition of financial debt to clear the doubt on inclusion of homebuyers within the ambit of financial creditors. “It means that homebuyers and other classed of financial creditors who have entered into purchase agreements having the commercial effect of borrowing were already covered under the code as it stood before the amendment. The explanation was inserted under Section 5(8)(f), providing that the allottees under the real estate project are considered as financial creditors, was only for the purpose of abundant clarity,” the affidavit said. Countering the stand of companies that homebuyers should not be part of the proceedings under IBC as they can raise grievances before consumer courts and the authority under Real Estate (Regulation and Development) Act, the Centre providing alternate remedy to them under a separate law is not violating of any constitutional provisions and sought dismissal of all the petitions filed by the companies."The amendment is only aimed at real estate developers who default in payment of financial debt owed to financial creditor, be it home buyers of other financial creditors. The amendment has no effect of driving solvent and healthy real estate developers to insolvency,"it said. Page 2 of 35 Opposing the plea of companies, the homebuyers also filed their reply and sought dismissal of the petitions. “Objective of the instant legislation was never to liquidate the company but to restructure the company and come up with a resolution plan correct the default committed by the company. It is pertinent to mention here that home buyers being the highest stakeholder in the project and their interest needs to be safeguarded as the same is of paramount importance,”advocate Aditya Parolia, who is representing a batch of homebuyers, said in his reply. ____________________________________________________________________________ Page 3 of 35 Newspaper/Online ET Realty (online) Date July 10, 2019 Link https://realty.economictimes.indiatimes.com/news/regulatory/jai-corp-claims- rs-510-crore-from-everest-group-in-a-public-notice/70151579 Jai Corp claims Rs 510 crore from Everest group in a public notice The payments were to be made by June 7, 2019 but did not take place, as per the public notice, issued by Urban Infrastructure Venture Capital Fund and Urban Infrastructure Real Estate Fund. Two entities linked to Jai Corp, promoted by Anand Jain of Reliance Industries, have claimed Rs 510 crore from the promoters of the city-based realty developer Everest Group for their alleged failure in developing a project in the megapolis. The Jai Corp entities came out with a public statement in the newspapers Tuesday detailing how projects went into arbitration and claimed that Everest group promoters-- Kishor Shah, Vimal Shah and Nainesh Shah--are yet to pay the sums awarded to them by an arbitration tribunal earlier this year. The payments were to be made by June 7, 2019 but did not take place, as per the public notice, issued by Urban Infrastructure Venture Capital Fund and Urban Infrastructure Real Estate Fund. The public notice said first instance involves a payment of Rs 275 crore with regard to the development of the erstwhile Bradbury Mills Property at Mahalaxmi in central Mumbai, where a panel consisting of a former CJI had on May 4 directed the Everest group promoters to pay Rs 275 crore by June 6. Development at this project was to be carried out jointly by Vengas Realtors, a special purpose vehicle created by the Everest group and Jai Corp entities, and Everest Fincap which is now known as Money Magnum Nest. Similarly, in respect of another investment with the Everest group promoters, an arbitral panel comprising two retired Supreme Court judges and a retired CJI passed an award to pay Rs 235 crore by June 26, it said. "Total amount payable is over Rs 510 crore," the notice said and warned that Jai Corp entities will begin appropriate legal proceedings against the Everest group promoters if the money is not paid. Jai Corp scrips closed flat on at Rs 99.60 on the BSE. ______________________________________________________________________________ Page 4 of 35 Newspaper/Online ET Realty (online) Date July 09, 2019 Link https://realty.economictimes.indiatimes.com/news/allied-industries/vatika- group-repays-rs-500-crore-dues/70139543 Vatika group repays Rs 500 crore dues Of the total repayment, the company has repaid HDFC’s debt of over Rs 80 crore while Indiabulls Housing Finance has received nearly Rs 420 crore for its respective project-level debt exposure. Realty developer Vatika Group has repaid debt worth Rs 500 crore to non-banking finance companies Housing Development Finance Corporation (HDFC) and Indiabulls Housing Finance. Of the total repayment, the company has repaid HDFC‟s debt of over Rs 80 crore, while Indiabulls Housing Finance has received nearly Rs 420 crore for its respective project-level debt exposure. Vatika had raised this debt from HDFC and Indiabulls Housing Finance in a phased manner since 2013. The debt repayment has been financed through a combination of monetization of its land parcels and commercial assets. In addition to sale of residential apartments at its projects, the company has monetised two of its land parcels, including one spread over 22 acre and the other 15 acre in Gurugram. Vatika has also monetised its commercial assets by availing Lease Rental Discounting (LRD) to raise the funds for this debt repayment. “We are looking to reduce our debt by nearly Rs 750 crore to Rs 1,000 crore over the next 8-9 months without compromising on our focus on developing integrated townships, commercial and residential projects,” Anirban Mukhopadhyay, CFO, Vatika Ltd, told ET. Apart from selling residential apartments and leasing commercial spaces, the company is looking to monetize more land parcels and availing lease rental discounting. It has leased over 2.1 million sq ft of commercial space and has sold 525 residential units over the past couple of quarters. “With recent changes in the affordable housing policies, we are poised to monetize and develop projects effectively with our land bank of nearly 300 acres in New Gurgaon,” he said, adding the company is in talks with a private equity firm to form an alliance for an affordable housing project on part of its 225 acre land parcel in New Gurgaon. ET‟s separate email queries to HDFC and Indiabulls Housing Finance remained unanswered till the time of going to press. Page 5 of 35 Vatika Group had raised private equity capital worth Rs 300 crore from Goldman Sachs in 2015. This investment was made in Vatika Hotels and the company regained 100% equity stake through an exit provided to Goldman Sachs in 2017. In 2007, the Vatika Group had raised Rs 800 crore in the form of equity at the holding company level. Goldman Sachs, the largest investor in that round along with Baer Capital Partners, had invested Rs 600 crore in the group. Wachovia Bank, which is now Wells Fargo, had put in Rs 200 crore in that investment round. All these investors have completely exited from the company. Singapore‟s sovereign fund GIC had invested in the Vatika Group projects in 2014 and still remains invested. _____________________________________________________________________________ Page 6 of 35 Newspaper/Online ET Realty (online) Date July 10, 2019 Link https://realty.economictimes.indiatimes.com/news/regulatory/nclat-reserves- order-on-jaypee-infra-land-mortgaged-with-jals-lenders/70151539 NCLAT reserves order on Jaypee Infra land mortgaged with JAL's lenders The appellate tribunal directed all the banks to file their written submissions by Friday over their claims. The National Company Law Appellate Tribunal (NCLAT) on Tuesday reserved its order over the issue of Jaypee Infratech's land mortgaged by Jaiprakash Associates Ltd (JAL) to its lenders. A two- member NCLAT bench headed by Chairman Justice S J Mukhopadhaya also reserved its order over the plea of leading lenders to include them in the Committee of Creditors (CoC) of the Jaypee Infratech, which is presently going through insolvency resolution. The appellate tribunal directed all the banks to file their written submissions by Friday over their claims.