Insolvency Appellate Tribunal NCLAT has upheld orders approving Adani Goodhomes’ resolution plan for realty firm Radius Estate with a 93% haircut for creditors.
A two-member bench comprising the NCLAT Chairman rejected the petitions by two dissenting financial creditors, saying it was “commercial wisdom” of the Committee of Creditors (CoC), which approved the payout to different creditors.
The Mumbai bench of the National Company Law Tribunal (NCLT) on January 9, 2022, approved the resolution plan of Adani Goodhomes, a part of Adani Realty.
As per the resolution plan, which received an 83.99% of the vote of the CoC and was approved by NCLT, nearly 700 flat owners were getting possession of without escalation of any price.
The plan was opposed by two dissenting financial creditors — Beacon Trusteeship and ICICI Prudential Venture Capital Fund Real Estate — before the National Company Law Appellate Tribunal (NCLAT).
According to reports, Adani Goodhomes had proposed to pay around ₹76 crore as against total claims of ₹1,700 crore. However, it had assured to complete the construction of the project.
The dissenting financial creditors moved the NCLAT contending it to be “unfair and inequitable” as it provides 93 per cent haircut to their claims.
On the other hand, it provides 100% recovery to homebuyers by way of allotted units in the project without them having to bear any haircut or price escalation.
Rejecting this, the NCLAT said, “It was a ‘commercial wisdom’ of the CoC, which approved the payout to different creditors.”
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It also rejected the claims of violation of Section 30, sub-section (2) of the Insolvency & Bankruptcy Code (IBC).
The dissenting financial creditors had alleged that the liquidation value of the assets of Radius Estate was grossly undervalued and the valuation report suffers from material irregularities.
It was also alleged that there were other material irregularities committed by the resolution professional in the entire process, which were hurried to approve the resolution plan submitted by Adani Goodhomes.
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However, NCLAT said, “It is relevant to notice that in the present case, the CoC has approved the resolution plan, which directed the haircut to the financial creditors and decided to handover the units to homebuyers, after completion of the construction, which construction cost was undertaken to be spent by the SRA (Adani Goodhomes).”
NCLAT further said dissenting financial creditors are entitled to receive their payment as per the provision of the IBC, which have already been offered.
“We, thus, are not persuaded to interfere with the order of the adjudicating authority (NCLT), approving the resolution plan on the above ground raised by the appellant,” it said.
The appellate tribunal further said NCLT in its order dated January 9, 2022, has adverted to all relevant considerations on which the resolution plan is to be checked for compliance of the statutory provisions.
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“We, thus, do not find any infirmity in the order of the adjudicating authority, approving the resolution plan dated January 9, 2022,” NCLAT said in its 59-page order.
Corporate Insolvency Resolution Process (CIRP) against Radius Estate was initiated on April 30, 2021, by NCLT over the plea filed by Beacon Trusteeship Ltd.
MIG (Bandra) Realtors and Builders was developing a project on land allotted to a Middle Income Group Cooperating Housing Society.
It had granted the obligations to complete construction of project certain rights to Radius Estates and Developers.
Radius had raised ₹65 crore from Beacon Trusteeship through Non-Convertible Debentures in 2018. However, due to certain financial constraints, the construction could not proceed since March 2018.
The society terminated the agreement and Beacon Trusteeship moved NCLT.
