The National Company Law Appellate Tribunal (NCLAT) has upheld the approval of Adani Goodhomes' resolution plan for the realty firm Radius Estate, despite a significant 93% haircut for creditors. The two-member NCLAT bench rejected the petitions filed by two dissenting financial creditors, stating that it was the "commercial wisdom" of the Committee of Creditors (CoC) to approve the payout to different creditors. The National Company Law Tribunal (NCLT) had earlier approved Adani Goodhomes' resolution plan, which received an 83.99% vote from the CoC and ensured 100% recovery for around 700 homebuyers without any price escalation. The dissenting creditors argued that the plan was "unfair and inequitable," but the NCLAT dismissed their claims, saying the NCLT had duly considered all relevant factors in approving the resolution plan.
The National Company Law Appellate Tribunal (NCLAT) has upheld the orders approving Adani Goodhomes' resolution plan for the realty firm Radius Estate, despite a 93% haircut for creditors.
A two-member bench of the NCLAT rejected the petitions filed by two dissenting financial creditors. The bench stated that it was the "commercial wisdom" of the Committee of Creditors (CoC) to approve the payout to different creditors.
The National Company Law Tribunal (NCLT) in Mumbai had earlier, on January 9, 2022, approved the resolution plan of Adani Goodhomes, a part of Adani Realty. As per the plan, which received an 83.99% vote from the CoC and was approved by the NCLT, around 700 flat owners were to receive possession of their units without any price escalation.
The plan was opposed by two dissenting financial creditors, Beacon Trusteeship and ICICI Prudential Venture Capital Fund Real Estate, before the NCLAT.
According to reports, Adani Goodhomes had proposed to pay around INR 76 crore against the total claims of INR 1,700 crore. However, the company had assured to complete the construction of the project.
The dissenting financial creditors argued that the proposed plan was "unfair and inequitable" as it provided a 93% haircut to their claims, while ensuring 100% recovery for homebuyers through allotted units without any haircut or price escalation.
Rejecting the arguments, the NCLAT stated that it was the "commercial wisdom" of the CoC to approve the payout to different creditors. The appellate tribunal also dismissed the claims of violation of the Insolvency & Bankruptcy Code (IBC).
The NCLAT further said that the NCLT had duly considered all the relevant factors in approving the resolution plan, and there was no infirmity in the order.
The Corporate Insolvency Resolution Process (CIRP) against Radius Estate was initiated on April 30, 2021, by the NCLT, based on a 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 subsequently granted development rights to Radius Estates and Developers to complete the project. However, due to financial constraints, the construction halted in March 2018, leading to the termination of the agreement and the initiation of the CIRP.
The NCLAT's decision to uphold the approval of Adani Goodhomes' resolution plan for Radius Estate, despite the significant haircut for creditors, underscores the authority granted to the CoC in the Insolvency and Bankruptcy Code (IBC) framework. The appellate tribunal's emphasis on the "commercial wisdom" of the CoC and the NCLT's consideration of relevant factors in approving the plan suggests a broader acceptance of the resolution process, even when it may not align with the interests of all stakeholders. This ruling sets a precedent that could have far-reaching implications for future resolution processes under the IBC.
Advertisement
Facebook
Whatsapp
