Creditors to Lavasa Corp invoked the ₹25-crore performance bank guarantee (PGB) by Darwin Platform Infrastructure (DPIL) earlier this month, citing non-compliance of the corporate insolvency resolution process (CIRP) timeline.
This came nine months after the National Company Law Tribunal had approved the transaction. The invocation of the guarantee means that the monitoring committee to implement the plan has now been dissolved and the CIRP process has been halted, putting the decision on the future of the private hill town project back before the NCLT.
“Lenders took a decision to invoke the guarantee because there was no movement on completion of the deal from Darwin. The upfront payment of ₹100 crore had to come within 90 days from NCLT order, which came in July, which is long overdue. Lead lender Union Bank has expressed its no confidence in the resolution applicant, so this was a logical move,” said a person familiar with the process.
Lead lender Union Bank of India had sought withdrawal of NCLT approval alleging connivance between the resolution professional (RP) Shailesh Verma and DPIL to undervalue the real estate assets of Lavasa, resulting in a loss to creditors of the company, ET had reported in October. Though petition by Union Bank was dismissed by the NCLT, a subsequent petition by State Bank of India (SBI) in the National Company Law Appellate Tribunal (NCLAT) was allowed and is still pending in court.
A DPIL spokesperson said the company “would not comment as the matter is in court”. Union Bank and RP Shailesh Verma did not reply to an email seeking comment.
Darwin Platform’s final plan submitted in December 2021 had envisaged a total payout of ₹1,814 crore over eight years to lenders and also included delivery of fully constructed houses to 837 home buyers, at a haircut of about 79% to financial creditors.
Lenders and DPIL have been engaged in a legal battle since the NCLT order. DPIL has cited legal issues and sought more time to complete the transaction. “The maintenance of the Lavasa city is being borne by lenders as part of the CIRP costs. In fact, out of the ₹100-crore upfront payment, ₹80 crore was set aside for the CIRP costs according to the plan. The expenses are much higher than that number. Invocation of the bank guarantee is an indication that lenders do not expect the plan to be implemented. The decision is now with the court,” said a second person aware of the process.
Besides Union Bank and SBI, Axis Bank, Bank of India, L&T Finance and Arcil are financial creditors to the company. ET has learnt that DPIL has filed an interlocutory plea against this invocation of guarantees and sought more time to complete the CIRP citing litigations around the project. ET could not ascertain the contents of this application.
