A bankruptcy court Friday allowed an application filed by the secured creditors of the Lavasa Corporation to restart a Corporate Insolvency Resolution Process (CIRP) for the company.
The Mumbai bench of the National Company Law Tribunal (NCLT), while directing the revival process to be re-initiated, also directed the Committee of Creditors (CoC) to exclude the period from July 13, 2021, to January 3, 2022, from the resolution process. The tribunal has also restored Shailesh Verma as the resolution professional (RP) of the company.
The tribunal’s order came in an application filed by the Union Bank of India, a secured creditor of the Lavasa Corporation on behalf of the secured creditors of the company, that sought to restore the resolution process for the company with the argument that the successful resolution applicant (SRA) Darwin Platform Infrastructure Ltd failed to implement the approved resolution plan within the timeline.
The company has admitted liabilities of more than Rs 6,642 crore, while Darwin Platform Infrastructure had proposed to pay Rs 1,814 crore.
“We found that the SRA has miserably failed to take any positive action to implement the approved resolution plan without any justifiable reasons, no purpose would be served by granting further time to SRA for implementation of the resolution plan,” observed a bench preceded by judicial member Kuldip Kumar Kareer and a technical member Anil Raj Chellan in its order.
Before the tribunal’s order, the lenders argued that the SRA (Darwin Platform Infrastructure) failed to implement the approved resolution plan within the timelines stipulated thereunder, the residential township of the corporate debtor gravely suffered and it resulted in various operational and maintenance issues such as security, sewage treatment, school, vendor, and employee payments and insurance.
“The SRA’s failure to adhere to even the first action it had to take in terms of monetary infusion i.e. the upfront payment of Rs 100 crores, makes it clear that the SRA does not have the intention of implementing its resolution plan,” argued the secured lenders.
Ashish Pyasi, partner at law firm Aendri Legal said generally, if a resolution plan has failed or is not implemented then the company is put into liquidation.
“However, in exceptional cases, the tribunal has restored the CIRP and directed for fresh submissions of resolution plans as done in the case of Lavasa. Therefore this case will come in the category of those special cases where the corporate debtor has been put back into the resolution process,” adds Pyasi.
Set up in 2000 by the Ajit Gulabchand-led HCC, Lavasa was developing the country’s first privately developed city spread over 20,000 acres in the Mulshi and Velhe areas in Maharashtra’s Pune district, around 180 km from Mumbai. However, the project has been entangled in various issues, including environmental violations and land acquisition, resulting in delayed payments to lenders.
When the company was admitted under insolvency resolution, HCC held a 68.7% stake in the company. While, Avantha Group has 17%, Venkateshwara Hatcheries 7.8% and Vithal Maniar 6.3% in Lavasa.
