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The National Company Law Tribunal has granted approval to a consortium led by Ashdan Developers for the insolvency resolution plan of D S Kulkarni Developers, a real estate developer burdened with debt. As part of the plan, the consortium intends to pay Rs 826.30 crore to the stakeholders of the developers.
In addition to Ashdan Properties, the consortium includes Classic Promoters & Builders and Atul Builders. The resolution professional overseeing the process received three bids, including ones from Mantra Properties & Developers and a consortium led by Hemendra Shah.
The successful resolution plan put forward by the Ashdan Developers-led consortium will make payments to secured creditors, unsecured creditors, and operational creditors. Homebuyers will be given flats as compensation for their claim amounts.
Representing the successful resolution applicant, senior counsel Vikram Nankani and advocate Shyam Kapadia informed the tribunal that the proposed amount includes an upfront payment of Rs 30.12 crore, as well as Rs 536.18 crore in Series-I non-convertible debentures (NCDs) and Rs 260 crore in Series-II NCDs.
The plan received approval from over 83.3% of the lenders represented by the committee of creditors (CoC), which consists of State Bank of India, ICICI Home Finance Company, Bank of Maharashtra, Bank of India, IDBI Bank, Tata Capital Housing Finance, and homebuyers.
The Mumbai bench of the National Company Law Tribunal (NCLT) had ordered the initiation of the corporate insolvency resolution process (CIRP) for D S Kulkarni Developers in September 2019 based on an application filed by lender Bank of Maharashtra. The company has developed projects in Pune, Mumbai, Bengaluru, Nashik, and even New Jersey in the US, leaving more than 700 homebuyers across five stalled projects waiting for possession of their homes.
The lenders and operational creditors of the distressed developer claimed a total of around Rs 1,750 crore, with nearly Rs 1,050 crore owed to 12 banks and other financial institutions. These financial creditors hold approximately 66.7% of the voting rights in the committee of creditors.
So far, the committee of creditors has conducted a total of 25 meetings, with six of them adjourned. Despite the complexities involved, such as the presence of a large number of troubled homebuyers, there has been steady progress in resolving insolvency and bankruptcy cases involving real estate companies.
According to the latest data from the Insolvency & Bankruptcy Board of India (IBBI), a total of 6,571 companies from various sectors have undergone administration as of March-end this year. Out of these, around 21% (1,380 companies) are from the real estate sector, and since the implementation of the Insolvency & Bankruptcy Code (IBC) in 2016, approximately 62% of these real estate companies, or 854 companies, have seen successful resolution plans.
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