NCLAT supports Adani Goodhomes' resolution plan for Radius Estate with 93% haircut

The resolution plan of Adani Goodhomes, which is a subsidiary of Adani Realty has got approval from the Mumbai bench of the National Company Law Tribunal (NCLT) on January 9, 2022. Though, the Insolvency Appellate Tribunal NCLAT has upheld orders of approving Adani Goodhomes' resolution plan for realty firm Radius Estate with a 93% haircut for its creditors.

The bench consisting of two members along with the NCLAT Chairman rejected the petitions by two dissenting financial creditors, and claimed that it was "commercial wisdom" of the Committee of Creditors (CoC), which approved the payout to different creditors.

he plan was opposed by two dissenting financial creditors -- Beacon Trusteeship and ICICI Prudential Venture Capital Fund Real Estate before the National Company Law Appellate Tribunal (NCLAT). 

As per the report, Adani Goodhomes has agreed to pay around Rs.76 crore as against total claims of Rs.1,700 crore. However, it had assured to complete the construction of the project.

Besides this, it offers 100% recovery to homebuyers by way of allotted units in the project without them having to bear any haircut or price escalation. It also rejected the claims of violation of Section 30, sub-section (2) of the Insolvency & Bankruptcy Code (IBC).

The financial creditors who disapproved the decision, had claimed that the liquidation value of the assets of Radius Estate was grossly undervalued and the valuation report suffers from material irregularities.

The creditors also alleged that, there were other irregularities pertaining to material committed by the resolution professional in the entire process, which were hurried to approve the resolution plan submitted by Adani Goodhomes.

The NCLAT said, "It is relevant to notice that in the present case, the CoC has approved the resolution plan, which directed the haircut to the financial creditors and decided to handover the units to homebuyers, after completion of the construction, which construction cost was undertaken to be spent by the SRA (Adani Goodhomes)."

NCLAT further added that, dissenting financial creditors are entitled to receive their payment as per the provision of the IBC, which have already been offered.

NCLAT also mentioned, "We, thus, are not persuaded to interfere with the order of the adjudicating authority (NCLT), approving the resolution plan on the above ground raised by the appellant."

The appellate tribunal further said NCLAT in its order dated January 9, 2022, has adverted to all relevant considerations on which the resolution plan is to be checked for compliance of the statutory provisions.

In its 59-page order, the authority added, "We, thus, do not find any infirmity in the order of the adjudicating authority, approving the resolution plan dated January 9, 2022."

Corporate Insolvency Resolution Process (CIRP) against Radius Estate was initiated on April 30, 2021, by NCLT over the plea filed by Beacon Trusteeship Ltd. Radius had raised Rs.65 crore from Beacon Trusteeship through Non-Convertible Debentures in 2018. However, due to certain financial constraints, the construction could not proceed since March 2018.