The National Company Law Tribunal (NCLT) has sanctioned an extraordinary exclusion of 936 days in the Corporate Insolvency Resolution Process (CIRP) for realty developer Lok Housing and Constructions, marking one of the lengthiest extensions in insolvency cases. Under bankruptcy regulations, the resolution process must be completed within 270 days, or the company faces mandatory liquidation. This significant exclusion is expected to defer Lok Housing's liquidation, granting approximately two and a half years to finalize the resolution. The decision followed a plea from the interim resolution professional.
In a landmark decision, the National Company Law Tribunal (NCLT) has sanctioned an exclusion of 936 days from the stipulated 270 days for the Corporate Insolvency Resolution Process (CIRP) of realty giant Lok Housing and Constructions. This duration ranks among the highest exclusions ever granted to a company under insolvency proceedings. Under bankruptcy regulations, lenders and resolution professionals are obligated to finalize the resolution process within 270 days. Failure to meet this deadline would typically result in the mandatory liquidation of the Mumbai-based company. However, the recent exclusion has effectively deferred the company's liquidation, providing an additional two and a half years to complete the resolution process. Exclusions of this nature are typically granted on a case-by-case basis, and in this instance, the decision followed a plea from Lok Housing and Constructions' interim resolution professional (IRP). The company was originally admitted to insolvency proceedings based on an application from healthcare company UV, triggered by the developer's default on dues in 2019, amounting to liabilities exceeding Rs 621 crore. The resolution professional was appointed in June 2019. However, a twist in the proceedings occurred when, after 15 days, the National Company Law Appellate Tribunal (NCLAT) directed the IRP not to constitute a Committee of Creditors (COC). Although this interim order was later vacated in August 2019, the tribunal had already granted an exclusion of 270 days from the CIRP period in December 2012. The IRP, in its application, implored the tribunal to exclude the entire period lost in litigation, which originated from legal challenges initiated by a former director. Founded in 1986, Lok Housing and Constructions served as the flagship company of the Lok Group of Companies, established in 1982. The company's extensive real estate and construction portfolio encompassed both residential and commercial projects, including the construction of railway quarters, railway bridges, and slum rehabilitation projects through its associate companies. The group played a significant role in developing housing complexes in Mumbai suburbs such as Khar, Andheri, Vikhroli, and Mulund, as well as outside Mumbai in Thane, Kalyan, and Ambernath. As of data available until 2012, Lok Housing and Constructions boasted a substantial land bank exceeding 650 acres in Turbhe, Ambernath, Kalyan, Vasai, Pune, and Bengaluru. Latest data from the Insolvency & Bankruptcy Board of India (IBBI) reveals that a total of 7,058 companies across various sectors entered administration until September-end. Notably, the real estate sector accounted for around 21% of these cases, with 1,482 companies, out of which approximately 1,059 have successfully undergone resolution plans since the inception of the Insolvency & Bankruptcy Code (IBC) in 2016.
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