The National Company Law Tribunal (NCLT) has ordered the initiation of corporate insolvency resolution process (CIRP) against realty developer Jupiter Landscapes following its default on repayments of non-convertible debentures (NCDs) worth Rs 573.98 crore.
The ruling was delivered after Edelweiss Asset Reconstruction Company filed a petition against the company under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
The Mumbai-based real estate firm had issued 1,850 secured, redeemable non-convertible debentures in March 2019, with a total face value of Rs 185 crore, to fund its business operations and development projects.
The debentures were initially subscribed by ECL Finance which, in March 2023, assigned them to Edelweiss Asset Reconstruction Company. Jupiter Landscapes defaulted on the payment of both the principal and interest, leading to the initiation of insolvency proceedings.
As of November 2023, the total outstanding amount had increased to Rs 563.98 crore, including the principal amount of Rs 185 crore, interest of Rs 132.93 crore, and default interest of Rs 256.05 crore.
The default occurred on March 26, 2023, when the company failed to meet the repayment deadline, and the loan account was classified as a non-performing asset (NPA).
Jupiter Landscapes, which primarily operates in the real estate development sector, cited the Covid-19 pandemic and other economic headwinds as reasons for its financial distress. The company’s operations were severely affected, resulting in an inability to service its debt obligations.
Despite the financial challenges, Jupiter Landscapes admitted to the default and did not object to the initiation of the CIRP, recognising the need for resolution in the interest of both creditors and customers involved in the company’s real estate projects.
In its ruling, the NCLT’s Mumbai bench, comprising judicial member Lakshmi Gurung and technical member Charanjeet Singh Gulati, found sufficient evidence of default and deemed the petition by Edelweiss Asset Reconstruction Company as valid.
The tribunal stated that since the debt amount exceeded the Rs 1 crore threshold mandated under the IBC, the petition was maintainable. It has appointed Kanchansobha Debt Resolution Advisors as the interim resolution professional (IRP) to oversee the insolvency process.
Additionally, a moratorium has been imposed, preventing the initiation or continuation of legal actions against Jupiter Landscapes, as well as any transfer or foreclosure of its assets, while the CIRP is underway.
The NCLT’s decision paves the way for the resolution of Jupiter Landscapes’ mounting debts, offering a potential revival for the embattled company or, alternatively, a route towards liquidation, should no resolution plan emerge during the insolvency process.
Till end of June, 7,813 companies across sectors were brought into administration, according to the latest data from IBBI (Insolvency & Bankruptcy Board of India). Of these companies admitted for resolution, 1,718, or 22%, have been from the real estate sector since the inception of the IBC in 2016.
