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Earlier this week, the National Company Law Tribunal (NCLT), cleared the bid put forth by Adani Good Homes to procure Radius Estates for a sum of Rs 76 crores. The decision comes despite several creditors such as ICICI Prudential Venture Capital Fund and Beacon Trusteeship opposing the bid on the grounds of foul play. The total outstanding claims filled with the NCLT amount to approximately Rs 1,700 crores.
According to a report by ET Realty, ICICI Prudential Venture Capital Fund and Beacon Trusteeship held debentures on behalf of their investors in the now defunct company. The two financial institutions believe the company’s resolution professional Jayesh Sanghrajka conspired with the largest creditor HDFC to influence the bankruptcy process in favour of Adani Good Homes will resulted in only one bid being received. They have demanded that the insolvency process be scrapped and started afresh. Of the Rs. 1,700 crore claims filled; debenture holders’ claims are estimated to be Rs 200 crores.
Adani Good Homes has offered Rs 76 crores to the financial creditors of Radius Estates who have a total loan outstanding of Rs 1,700 crores. This amount will mean a 96 percent haircut for creditors, a highly unusual resolution in regular bankruptcy proceedings. This bid was approved by a two-third majority of the company creditors including financial institutions such as HDFC Bank and Yes Bank and almost all 700 homeowners. As per the insolvency laws prevailing in India, at least two-third of the creditors must approve a debt resolution before it can be passed.
Although the NCLT recognised the unusualness of the situation, it dismissed claims of foul play on account of lack of sufficient evidence. In its bid, the Adani Group has promised to complete construction of the residential project ‘X BKC’ in Mumbai at no further cost to the homeowners. The homeowners are said to have collectively advanced Rs 800 crores to the company to book their flats. Although homeowners have the same rights as financial creditors, they are counted as a separate class of creditors.
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