NCLT rejects claims of foul play in insolvency of Radius Estates

National Company Law Tribunal (NCLT) has rejected claims of foul play in the resolution process of Mumbai realtor Radius Estates for which Adani group company, Adani Good Homes, has emerged as the successful bidder, as per an order of the tribunal pronounced on 2 December that has been seen by ET.

Debenture holders of the company led by ICICI Prudential and Beacon Trusteeship had approached NCLT with a plea to turn down Adani Good Homes’ offer for Radius Estates claiming the company had violated the bidding conditions.

They claimed that Adani Good Homes resolution plan for the Mumbai realtor had unfairly tried to appropriate Rs. 800 crore worth of receivables of the company by incorporating a condition in its bid that the receivables once recovered by the company would accrue to Adani. The debenture holders claimed that the bidding conditions stated that the recoveries of receivables would accrue to the creditors.

ET had reported on 24 August that Adani later agreed to change the bid condition and allow the creditors to keep the money from the receivables.
NCLT noted that since Adani had changed the condition, the debenture holders objection to its resolution plan is not valid.

The debenture holders also claimed that the main creditor HDFC colluded with the company’s resolution professional Jayesh Sanghrajka to influence the resolution process because it would benefit as it was wearing twin hats, that of a financial creditor as well as a home buyer who holds inventory in the project through mortgage on flats. They had claimed that HDFC did not care about the haircut as a financial creditor because the inventory it holds in the project would be completed and was valuable.

NCLT rejected those allegations as well citing that “suspicion however strong is not a substitution for proof”.

Adani Good Homes Private Limited is the sole bidder for Radius Estates. Its resolution plan offers Rs. 76 crore to the company’s financial creditors who have outstanding claims of around Rs. 1700 crore. This amounts to a hair cut of nearly 96% for the financial creditors. However, it is constructing flats of the home owners at no further cost to them and has enabled restart of the construction of the company’s residential projects.

ICICI Prudential VC fund has a Rs. 150 crore claim against the insolvent realtor and is representing the interests of 1810 investors who invested in its real estate investment scheme that in turn subscribed to debentures of Radius Estates. HDFC Limited has a Rs. 1000 crore outstanding loan to the company.

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