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The National Company Law Appellate Tribunal (NCLAT) has issued a stay order against a bankruptcy court's decision to admit an insolvency resolution plea against DB Realty, a prominent real estate developer listed on the stock exchange. The matter will be further examined on September 6 by a division bench consisting of Justice Ashok Bhushan and technical member Barun Mitra.
DB Realty approached the appellate tribunal to challenge the National Company Law Tribunal's (NCLT) order on July 4, which approved Bank of India's plea for a corporate insolvency resolution process (CIRP) against the company. However, the detailed order from the appellate tribunal has not been made available at the time of reporting.
A source familiar with the matter revealed that DB Realty will be required to deposit ?387 crore within 90 days, in accordance with its previous one-time-settlement (OTS) offer to Bank of India. The company has proposed full recovery of the principal amount plus interest at the Marginal Cost of Funds Based Lending Rate (MCLR), and the bank is currently considering this proposal.
Senior counsel Mukul Rohatgi, along with senior advocate Arun Kathpalia and Akash Agarwal of ABH Law, appeared before the NCLAT on behalf of DB Realty's promoters and confirmed the latest developments in the case.
Recently, the NCLT accepted Bank of India's petition to initiate an insolvency resolution process against DB Realty and appointed Prashant Jain as the company's resolution professional. The public sector bank claimed a default amount of ?760 crore as of September 30, 2022, along with accrued interest. The default date was cited as August 30, 2015. The bank had granted a term loan of ?225 crore to Pune Buildtech in September 2013 for constructing residential towers in Pune's Yerwada area, with DB Realty providing a guarantee for the loan.
Due to a lack of funds, the company was unable to complete the project and halted construction work around September 2016. As a result of non-payment of interest since August 2015, the loan account was classified as a non-performing asset (NPA) in December 2015, according to the bank's application.
When the financial creditor received no positive response to the notice sent to Pune Buildtech, a legal notice invoking the guarantee was issued in October 2022, demanding DB Realty repay the total outstanding debt of over ?760 crore.
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