NCLT orders fresh insolvency proceedings for Lavasa Corp

Mumbai: The insolvency proceedings of Lavasa Corp. has taken a U-turn after the Mumbai bench of the National Company Law Tribunal dismissed the resolution application of Darwin Platform Infrastructure Ltd for the acquisition of the hill station city. The tribunal has further allowed creditors to restore the insolvency process to sustain it as a going concern.

In an order issued on Friday on the matter of petition filed by the creditors against DPIL, the NCLT said, “We found that the successful resolution applicant (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.” The plan approval application shall stand excluded having been rendered redundant owing to the failure of the SRA to implement the resolution plan, it said.

The tribunal also upheld the creditors' decision to invoke the performance bank guarantees (PBG) worth ₹25 crore by DPIL citing non-compliance of the insolvency process.

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"We are further of the considered view that since the SRA is blatantly and consciously responsible for the failure of implementation of the Approved Resolution Plan, its inevitable consequence is the invocation of PBG furnished by SRA. We, therefore, hold that the PBG has been rightly invoked and encashed by the Union Bank and there is nothing illegal or improper in the same," the court said.

Similarly, the tribunal also ordered the dismissal of the resolution application by DPIL in other petitions filed by the homebuyers.

Mint has reviewed copies of the orders.

The final order comes a year after the NCLT approved the resolution plan. However, in October, Union Bank 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.

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The NCLT rejected Union Bank’s contention, but then another creditor, State Bank of India, filed an appeal in the NCLAT in November, making similar observations. This appeal was dismissed by the NCLAT.

Bankground

In April this year, ICICI Bank on behalf of creditors invoked guarantee worth ₹25 crore citing failure to implement the resolution plan. This move was triggered by the failure on the part of DPIL to submit an upfront payment of ₹100 crore within 90 days of the NCLT approval.

DPIL's resolution plan submitted in December 2021 had proposed a total investment of ₹1,814 crore over eight years to lenders and construction of homes.

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The home buyers, too, had raised questions regarding the finances of DPIL. Mint had reported in December that home buyers alleged understatement of liabilities and overstatement of reserves and surplus by DPIL. These homebuyers had also alleged that the company has neither the resources nor management expertise and competence to successfully implement the resolution plan.