The customers and bankers of debt-ridden Jaypee Infratech have locked horns over whether a forensic audit of the company is needed, with the former pressing for one and the latter opposing such a measure.
“There is conflict among the buyers and lenders. While buyers want a forensic audit, bankers are opposing the move as they feel that it would unnecessarily delay the process. If this matter is not resolved, it would pose a challenge for the future,” said a member of the firm’s Committee of Creditors (CoC).
The spat came to light when the buyers went public with a statement which said that their demand for a forensic audit was strongly resisted by banks at a meeting of its lenders on February 18. The meeting had been held to examine resolution plans submitted by state-owned NBCC and Suraksha Asset Reconstruction Company to take over the realty firm and complete its stalled projects.
One reason why the company’s customers are demanding a forensic audit is because the parent company Jaiprakash Associates had earlier tabled a settlement plan under the IBC. Buyers claim that this shows the company had access to money and the matter must hence be looked into.
“The home buyers themselves had commissioned a parallel audit of JIL’s financials based on freely available documents and came to a conclusion that heavy siphoning of funds did occur… But such a study done at the behest of the home buyers, suffered with its own latent disabilities such as no access to exact records and a limited look back period,” their statement admitted. However, despite their presentation, buyers claim that bankers are blocking the request to “safeguard themselves”.
“It is imperative that such details are delved into properly through a proper forensic audit since inception of JIL. In the past, the interim insolvency resolution professional had commissioned an audit of the transactions entered into/done at the behest of JIL, but with only a look back period of two years, which does not serve the purpose,” the statement added. Such resistance from the bankers’ side also creates apprehensions against the bonafides of banks themselves, they went on to say.
The firm’s customers have now sought the assenting votes of IDBI Bank, India Infrastructure Finance, Life Insurance Corporation of India, State Bank of India, Corporation Bank, Syndicate Bank, Bank of Maharashtra, ICICI Bank, Union Bank of India, IFCI, Jammu & Kashmir Bank, Axis Bank and SREI Equipment Finance.
Of the 24,000 homebuyers, only 9,500 are part of the Committee of Creditors (CoC) and taking part in the voting process, while the remaining have not exercised right to vote.