Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
The National Company Law Appellate Tribunal has dismissed a petition filed by the suspended promoter and director of Renaissance Indus Infra, a real estate and construction company, against the bankruptcy court's decision to admit the company under the corporate insolvency resolution process (CIRP) following a plea by its financial creditor, Catalyst Trusteeship. The lender had moved the bankruptcy court after the company defaulted on its dues worth nearly Rs 444 crore.
The promoter had argued that the application filed by the lender was not maintainable and could have been filed only by the debenture trustee, Vistra ITCL (India). However, the NCLAT bench comprising chairperson Justice Ashok Bhushan and technical member Barn Mitra dismissed the promoter's appeal, stating that the debt and default had not been disputed, and the borrower had not replied to demand and enforcement notices.
Renaissance Group, through its special purpose vehicle (SP) project RUIPL and Renaissance India, had initially availed funding from Edelweiss Financial Services. As per the debt term sheet signed in 2018, the company was proposing to refinance the outstanding amount with Edelweiss and avail additional funding for project development expenses. As per the debt term sheet executed between Altico Capital India and the company, Altico had agreed to subscribe to non-convertible debentures (NCDs) amounting to Rs 390 crore, and an amount of Rs 280 crore was disbursed.
A debenture trust deed was executed in June 2018 between the company as the issuer and Vista ITCL India as debenture trustee, and in March 2021, Altico, as debenture holder, transferred all its rights under the debentures along with the underlying security interest and rights created by Renaissance Group and the other obligations in connection with these debentures in favor of the financial creditor.
Nishit Dhruva, managing partner of law firm MDP & Partners, who appeared for the lender in the tribunal, confirmed the development but refused to divulge the details since the matter is sub judice. The NCLAT bench also stated that the submission of the appellant that there was no majority opinion of the financial creditor to take action against the corporate debtor under the debenture trust document loses its significance, as the other creditor, Clearwater Capital Singapore Fund, had already initiated action under Section 7 of the IBC, and both creditors were unanimous in taking action against the corporate debtor.
The current ruling by the NCLAT will allow the bankruptcy process to proceed against Renaissance Indus Infra, and the financial creditor, Catalyst Trusteeship, will have the opportunity to recover its dues through the CIRP. The case highlights the importance of maintaining timely repayment of debts and the consequences of defaulting on loans in the Indian real estate and construction industry.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
