The National Company Law Tribunal (NCLT) has initiated the corporate insolvency resolution process (CIRP) for Jupiter Landscapes due to its failure to repay INR 573.98 crore in non-convertible debentures. The Mumbai-based firm, which defaulted on payments since March 2023, attributed its financial struggles to the Covid-19 pandemic and economic challenges. With a total outstanding amount of INR 563.98 crore, the NCLT found sufficient evidence of default and appointed an interim resolution professional to oversee the process. This ruling could either lead to the company's revival or liquidation, highlighting the ongoing challenges faced by the real estate sector.
The National Company Law Tribunal (NCLT) has mandated the initiation of the corporate insolvency resolution process (CIRP) for realty developer Jupiter Landscapes due to its failure to repay non-convertible debentures (NCDs) amounting to INR 573.98 crore. This decision came after Edelweiss Asset Reconstruction Company submitted a petition against the firm under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
The Mumbai-based real estate company had issued 1,850 secured, redeemable non-convertible debentures in March 2019, with a total face value of INR 185 crore, to support its business operations and development projects. Initially subscribed by ECL Finance, these debentures were assigned to Edelweiss Asset Reconstruction Company in March 2023. Jupiter Landscapes subsequently defaulted on both the principal and interest payments, prompting the initiation of insolvency proceedings. By November 2023, the total outstanding amount had escalated to INR 563.98 crore, comprising the principal amount of INR 185 crore, interest of INR 132.93 crore, and default interest of INR 256.05 crore.
The default took place on March 26, 2023, when the company missed the repayment deadline, leading to the classification of the loan account as a non-performing asset (NPA). Jupiter Landscapes, which mainly focuses on real estate development, attributed its financial difficulties to the Covid-19 pandemic and various economic challenges. The pandemic significantly impacted the company's operations, hindering its ability to meet debt obligations. Despite these financial struggles, Jupiter Landscapes acknowledged the default and did not contest the initiation of the Corporate Insolvency Resolution Process (CIRP), recognising the necessity of resolution for the benefit of both creditors and customers involved in its real estate projects.
In its decision, the Mumbai bench of the NCLT, which includes judicial member Lakshmi Gurung and technical member Charanjeet Singh Gulati, found ample evidence of default and deemed Edelweiss Asset Reconstruction Company's petition to be valid. The tribunal noted that the debt amount exceeded the INR 1 crore threshold stipulated under the Insolvency Code, making the petition maintainable. It has appointed Kanchansobha Debt Resolution Advisors as the interim resolution professional (IRP) to manage the insolvency process. Furthermore, a moratorium has been imposed, halting any legal actions against Jupiter Landscapes and preventing the transfer or foreclosure of its assets while the Corporate Insolvency Resolution Process (CIRP) is in progress.
The NCLT's ruling opens the door for addressing Jupiter Landscapes' escalating debts, presenting a chance for the struggling company to revive itself or, alternatively, leading to liquidation if a resolution plan is not developed during the insolvency process. As of the end of June, a total of 7,813 companies across various sectors have been placed in administration, according to the latest data from the Insolvency and Bankruptcy Board of India (IBBI). Among these companies, 1,718, or 22%, belong to the real estate sector since the Insolvency and Bankruptcy Code (IBC) was introduced in 2016.
The NCLT's decision signifies a critical juncture for Jupiter Landscapes as it seeks to resolve its mounting debts. With the real estate sector facing heightened pressures, the outcome of this insolvency process will have broader implications for the industry's recovery and future sustainability.
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