Creditors of Lavasa Corp, India’s first private hill town project, have introduced stricter eligibility criteria for potential bidders after a failed sale attempt earlier this year. Led by Union Bank of India (UBI), 77% of lenders have agreed to require a net worth of INR 100 crore and a refundable deposit of INR 25 lakh for expressions of interest. A new resolution professional and process advisor are expected to replace current overseers. The National Company Law Tribunal recently revived the insolvency process after Darwin Platform Infrastructure failed to implement the approved resolution plan, leaving creditors seeking a fresh approach to secure a buyer.
Creditors of the defunct Lavasa Corp, once regarded as India’s first private hill town project, have established new eligibility criteria for prospective bidders. This move comes as they seek a buyer for the second time after abandoning their previous attempt earlier this year. The committee of creditors (CoC) met on September 17, revealing that 77% of lenders, led by Union Bank of India (UBI), have agreed to set minimum requirements for bidders. This marks a significant shift from the last round, which aimed to "maximize participation" without any criteria.
The new eligibility requirements include a INR 100 crore net worth and a INR 25 lakh refundable deposit for expressions of interest (EOIs). Alongside these criteria, lenders are looking to implement changes, likely involving a new resolution professional (RP) to replace Shailesh Verma, and appointing a new process advisor to take over from Deloitte, both of whom have overseen a process that ultimately failed.
A joint lenders forum (JLF) convened by UBI is expected to finalise timelines and appoint a new RP as early as next week, aiming to move forward after numerous complications in the case. A source familiar with the discussions indicated that lenders want to ensure that no details are overlooked as they restart the process. It has been generally agreed that a new Form G will be issued to invite interest from new applicants, likely in the first week of October. The lenders are also considering several candidates for the new RP.
Union Bank holds 12% of the total dues, amounting to INR 6,642 crore. Phoenix ARC, the second-largest creditor, owns nearly 11% of the total debt, having acquired it from L&T Finance just before the National Company Law Tribunal (NCLT) approved the plan in July 2023. Other significant creditors include Arcil, Bank of India, and Axis Bank, each holding over 8% of the debt.
Earlier this month, the Mumbai bench of the NCLT allowed the revival of the insolvency process, permitting the CoC to exclude the period from July 13, 2021, to January 3, 2022, from consideration. In a detailed 36-page ruling, the two-judge bench stated that the successful resolution applicant, Darwin Platform Infrastructure (DPIL), failed to implement the approved resolution plan by not paying the required INR100 crore upfront without adequate justification. Thus, the court concluded that extending the timeline for implementation would serve no purpose.
Additionally, the court addressed allegations of discrepancies in financial reporting, including misrepresentation of net worth and share capital, but refrained from issuing a ruling on these matters, viewing homebuyers as neither necessary nor proper parties for adjudication. DPIL's final plan proposed a total payout of INR1,814 crore over eight years to lenders, delivering fully constructed homes to 837 homebuyers, resulting in a haircut of about 79% for financial creditors.
In conclusion, as Lavasa Corp navigates this renewed bidding process, creditors are determined to implement stricter criteria and oversight to avoid past pitfalls. The upcoming weeks will be crucial in determining whether a suitable buyer can emerge, enabling the project to move forward and fulfill its commitments to stakeholders.
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