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The insolvency proceedings for Lavasa Corporation, facing bankruptcy, have encountered a new twist as the National Company Law Appellate Tribunal's (NCLAT) principal bench granted State Bank of India (SBI) permission to challenge the lower court's approval of the resolution plan submitted by Darwin Platform Infrastructure (DPIL). This marks the second objection by a bank to Lavasa Corporation's loan default resolution, a significant hill town project. SBI contends that DPIL did not adhere to the waterfall mechanism of the Insolvency and Bankruptcy Code (IBC), and former Attorney General of India KK Venugopal, representing SBI, sought condonation for the appeal's filing delay. Despite creditors approving the resolution plan in December 2021 and the National Company Law Tribunal (NCLT) granting approval in July this year, SBI's objection arises from concerns about DPIL's compliance with the IBC's waterfall mechanism. SBI's argument challenges the treatment of government dues as secured creditors, which differs from the IBC's provisions. In response, the NCLT had relied on the Supreme Court's Rainbow Papers case, which granted state tax authorities parity with secured financial creditors. The recent apex court dismissal of review petitions challenging the Rainbow Papers order further solidified the NCLT's stance. The NCLAT's recent order has given both SBI and DPIL two weeks to submit replies, with the case scheduled for a hearing on January 10, 2024. DPIL, responding to queries, dismissed SBI's petition as a delaying tactic and questioned the sincerity of SBI's motives. DPIL expressed concerns about the transparency and fairness of the resolution proceedings, accusing SBI of creating unnecessary obstacles. Documents reveal that the resolution professional, Shailesh Verma, opposed SBI's plea, citing its filing beyond the 15-day limit set by the IBC for appeals. The SBI's appeal follows Union Bank of India's recent attempt to withdraw NCLT approval, alleging collusion between Verma and the winning bidder to undervalue Lavasa Corporation's real estate assets, resulting in losses for creditors. While the NCLT dismissed this petition, Union Bank is reportedly considering filing a fresh plea in the NCLAT. Despite the ongoing legal developments, DPIL has not implemented its resolution plan submitted in December 2021, raising doubts about its intentions. The plan proposed a total pay-out of Rs 1,814 crore over eight years to lenders, including the delivery of fully constructed houses to 837 homebuyers at a substantial haircut of about 79% for financial creditors. The delay in DPIL's action has led to uncertainties surrounding the company's ability to take control of Lavasa and fulfil its proposed financial commitments.
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