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Suraksha Realty wins Jaypee Infratech bid; turns private
Real Estate

Suraksha Realty wins Jaypee Infratech bid; turns private

Suraksha Realty, the winning bidder for Jaypee Infratech, will pay an exit price to retail shareholders as the company delists from stock exchanges. Shareholders holding approximately 542 million equity units will be compensated at a value on par with the company's liquidation value.

"The board of directors has set June 21, 2024, as the record date for determining which shareholders will receive the exit price," stated a regulatory disclosure. The exit price, an aggregate amount of Rs 1.4 million, matches the liquidation value, according to the company.

This move is seen as a goodwill gesture, according to a lender. Ashish Pyasi, a partner at Aendri Legal, noted that shareholders are typically the last to receive payment under the insolvency code's waterfall mechanism, often receiving nothing if the debt is too high. He highlighted the uniqueness of Jaypee Infratech?s resolution plan, as retail shareholders are rarely offered exit prices in such cases.

At the time the resolution plan was approved, Jaypee Infratech had liabilities exceeding Rs 230.83 billion, including Rs 97.83 billion owed to secured financial creditors. Nipun Singhvi, managing partner at NSA Legal, mentioned that this payment to shareholders could set a precedent for future cases, as typically there isn?t enough payout to cover even the financial creditors.

Historically, shareholders have not been compensated in similar situations, such as with National Steel and Agro Industries (NSAIL), Videocon Industries, and Sintex Industries. This development coincides with an investor in Reliance Capital (RCAP) approaching the Bombay High Court to challenge the company's delisting following its resolution process closure.

Last year, the National Company Law Tribunal (NCLT) approved Suraksha Realty's resolution plan, which included offering around 2,500 acres to bankers and Rs 13 billion in non-convertible debentures. Suraksha Realty also committed to completing all pending flats for customers within four years. Jaypee Infra shares recently closed at Rs 1.27 each, with a market cap of Rs 1.76 billion.

Suraksha Realty, the winning bidder for Jaypee Infratech, will pay an exit price to retail shareholders as the company delists from stock exchanges. Shareholders holding approximately 542 million equity units will be compensated at a value on par with the company's liquidation value. The board of directors has set June 21, 2024, as the record date for determining which shareholders will receive the exit price, stated a regulatory disclosure. The exit price, an aggregate amount of Rs 1.4 million, matches the liquidation value, according to the company. This move is seen as a goodwill gesture, according to a lender. Ashish Pyasi, a partner at Aendri Legal, noted that shareholders are typically the last to receive payment under the insolvency code's waterfall mechanism, often receiving nothing if the debt is too high. He highlighted the uniqueness of Jaypee Infratech?s resolution plan, as retail shareholders are rarely offered exit prices in such cases. At the time the resolution plan was approved, Jaypee Infratech had liabilities exceeding Rs 230.83 billion, including Rs 97.83 billion owed to secured financial creditors. Nipun Singhvi, managing partner at NSA Legal, mentioned that this payment to shareholders could set a precedent for future cases, as typically there isn?t enough payout to cover even the financial creditors. Historically, shareholders have not been compensated in similar situations, such as with National Steel and Agro Industries (NSAIL), Videocon Industries, and Sintex Industries. This development coincides with an investor in Reliance Capital (RCAP) approaching the Bombay High Court to challenge the company's delisting following its resolution process closure. Last year, the National Company Law Tribunal (NCLT) approved Suraksha Realty's resolution plan, which included offering around 2,500 acres to bankers and Rs 13 billion in non-convertible debentures. Suraksha Realty also committed to completing all pending flats for customers within four years. Jaypee Infra shares recently closed at Rs 1.27 each, with a market cap of Rs 1.76 billion.

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