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NCLT dismisses homebuyers’ petition to reject Lavasa insolvency resolution plan

The National Company Law Tribunal (NCLT) has dismissed a petition filed by around 368 homebuyers who had purchased properties from Lavasa Corporation. The petition had alleged misconduct in the corporate insolvency resolution process (CIRP) of the company and mistreatment of the homebuyers as a class of creditors.

The homebuyers, in their petition, had sought the tribunal’s intervention to declare the resolution plan submitted by Darwin Platform Infrastructure in violation of the Insolvency and Bankruptcy Code (IBC) and prayed to reject the revival plan, which was earlier approved by the lenders of the company.

When the company was admitted into insolvency, it owed over ₹6,200 crore to its financial creditors and more than ₹400 crore to 840 homebuyers.

On August 30, 2018, when the company was admitted for the insolvency process for revival, Hindustan Construction Company (HCC) in its exchange filing said the project was severely impacted by a notification issued by the ministry of environment and forest (MoEF) that directed the company to stop work for jurisdictional reasons and not for environmental infractions.

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 Maharasthra’s Pune district, around 180 km from Mumbai. However, the project has been entangled in various issues, including environmental violations and land acquisition.

After Lavasa and its subsidiaries defaulted on debt obligations, the lenders sought debt resolution through the NCLT in August 2018 under the Insolvency and Bankruptcy Code, 2016.

Lavasa was held jointly by HCC with a 68.7% stake, Avantha Group 17.18%, Venkateshwara Hatcheries 7.81% and Vithal Maniar 6.29%.

During the course of the resolution process, the committee of creditors (CoC) approved the resolution plan dated November 20, 2021 as proposed by Darwin Platform Infrastructure, the successful resolution applicant, with a 96.41% voting share in their meeting on November 23, 2021. The resolution plan is pending for approval before the NCLT Mumbai bench.

According to the homebuyers’ plea, the homebuyers were promised to be paid the liquidation value in case they voted against the plan, but the liquidation value attributable to the homebuyers was never calculated or disclosed.

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