NCLT Mumbai Approves Resolution Plan For Lavasa Corporation; Homebuyers Can Opt For Completed Units

The Homebuyers would get fully constructed properties within five (5) years from the receipt of the Environmental Clearance, on an actual cost basis. Two exit alternatives have also been given to the Homebuyers, i.e. (i) Homebuyers can undertake self-construction of their properties, entirely at their own responsibility, costs and expenses; and (ii) Homebuyers not willing to wait for delivery of fully-constructed property, can seek final settlement of 40% of entire admitted claims.

Background Facts

Lavasa Corporation Limited (“LCL/Corporate Debtor”) is engaged in the business of construction and development of a private hill station named Lavasa in Pune, Maharashtra.

Dasve Convention Centre Limited (“DCCL”), Warasgaon Asset Maintenance Limited (“WAML”), Dasve Retail Limited (“DRL”) and Warasgaon Power Supply Limited (“WPSL”) are wholly owned subsidiaries of LCL, which provide ancillary services such as hospitality, recreation infrastructure construction, power and distribution infrastructure etc.

Raj Infrastructure Development India Pvt. Ltd. (“Operational Creditor”) filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against LCL. The CIRP was initiated against LCL on 30.08.2018 by the NCLT.

Subsequently, DCCL, DRL, WPSL and WAML were also admitted into CIRP by the NCLT.

The NCLT permitted consolidated CIRP of LCL alongwith DCCL, DRL, WPSL and WAML (collectively, “Corporate Debtors”).

Darwin Platform Infrastructure Limited (“Successful Resolution Applicant/SRA”) submitted a Resolution Plan for the Corporate Debtors, which was approved by the Committee of Creditors (“CoC”) with 96.41% voting share. Accordingly, the Resolution Professional filed an application under Section 30(6) of IBC before the NCLT, seeking approval of the Resolution Plan.

Outlay Of The Resolution Plan

The consolidated Fair Value is Rs. 1,838.12 Crores and the consolidated Liquidation Value is Rs. 770.11 Crores. The Resolution Plan is valued at Rs. 1,814 Crores.

The resolution plan proposes to pay the Financial Creditors an amount of Rs. 1152.76 Crores (inclusive of interest) against their admitted claims.

The Operational Creditors have been paid Rs. 9.69 Crores and the Workmen and Employees are proposed to be paid 5.57 crores. The Homebuyers would receive fully constructed units in lieu of their claims. An amount of Rs. 250 Crores is to be infused towards completion of under construction units.

Treatment Of Homebuyers

The Resolution Plan proposes to deliver fully-constructed properties to the Homebuyers within five years from the receipt of the Environmental Clearance, on an actual cost basis. The Homebuyers shall pay actual future construction costs to the SRA towards obtaining constructed properties in the Project. A “Construction Cost Determination Committee” is to be constituted with equal representation of Homebuyer's representatives and SRA’s Management Team. Such Committee would estimate and approve the actual cost for construction and apportionment of such costs to individual home buyers.

The Resolution Plan also contains two exit alternatives for Homebuyers:

• Exit Clause: For the homebuyers who do not wish to continue and wait for delivery for the fully-constructed property as proposed, the Resolution Plan envisages a full and final settlement by payment of 40% of their entire admitted claims within 24 months of the receipt of the EC for Phase 1.
• Self-Construction: Within the contours and permissibility of such activity as per applicable laws, the Resolution Plan also envisages providing an option to the homebuyers to undertake self-construction of their properties, entirely at their own responsibility / accountability, costs and expenses.

Further, for homebuyers who have terminated contracts under RERA, the Resolution Plan proposes payment of amounts ordered by the MAHA RERA under individual cases by way of payment of Rs. 4.037 Crores within 24 months from the Effective Date.

NCLT Verdict

The Bench has approved the Resolution Plan of Darwin Platform Infrastructure Limited for Lavasa Corporation Limited.

Case Title: Raj Infrastructure Development India Pvt. Ltd. v Lavasa Corporation Limited

Case No.: C.P.(IB)/1765(MB)2018

Counsel For Applicant: Kriti Kalyani, Advocate for RP Ravi Kadam, Senior Counsel, Ashish Kamat, Senior Counsel a/w Salonee Kulkarni, Kriti Kalyani i/b Shradul Amarchand Mangaldas & Co.

Counsel for Respondent: Ashish Kamat, Senior Counsel.

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