NCLAT Upholds Adani Goodhomes' Takeover of Radius Estates, Dismissing Creditor Challenges

Introduction

The National Company Law Appellate Tribunal (NCLAT) has upheld Adani Goodhomes' resolution plan to take over the bankrupt real estate company Radius Estates. This decision, rendered on Monday, rejects the challenges posed by creditors and debenture holders, including ICICI Prudential Venture Capital Fund and Beacon Trusteeship. The NCLAT's ruling reaffirms the earlier approval by the Mumbai bench of the National Company Law Tribunal (NCLT), dismissing allegations of foul play and collusion. The ruling marks a significant milestone in the insolvency process of Radius Estates, a project marred by halted construction and significant financial distress.

Recent Developments

• Resolution Plan Approval: The NCLAT's decision upholds the NCLT Mumbai's December 2022 approval of Adani Goodhomes' resolution plan, despite allegations of collusion involving the resolution professional (RP), Jayesh Sanghrajka, and HDFC Ltd, the largest creditor.
• Creditors' Allegations: Creditors claimed collusion led to only one bid and demanded a restart of the insolvency process. The NCLT, however, found no evidence to support these allegations.
• Adani Goodhomes' Offer: Adani Goodhomes, a subsidiary of Adani Infrastructure and Developers Pvt. Ltd., offered? 76 crore to creditors against outstanding loans of approximately? 1,700 crore, resulting in a significant 96% haircut for creditors.
• Homeowner Commitments: Adani Goodhomes has committed to completing the residential project in Mumbai at no further cost to homeowners. The bid had strong support from over two-thirds of the creditors, including homeowners who had collectively advanced. 800 crore for their homes.
• Voting and Approval: The resolution plan received an 83.93% voting share approval from the Committee of Creditors and subsequently received NCLT approval. Indian insolvency laws require two-thirds of creditors to approve a debt resolution process.
• Project Background: Radius Estates partnered with MIG (Bandra) Realtors and Builders Pvt. Ltd. for a redevelopment project in Bandra (East), Mumbai. Construction halted in January 2020, leading to insolvency proceedings initiated by Beacon Trusteeship Ltd. on April 30, 2024.

Conclusion

The NCLAT's decision to uphold Adani Goodhomes' resolution plan marks a pivotal development in the insolvency proceedings of Radius Estates. Despite facing significant allegations and challenges from various creditors, the resolution plan's approval reflects a legal endorsement of the process followed by the resolution professional and the Committee of Creditors. Adani Goodhomes' commitment to completing the project offers a glimmer of hope to the affected homeowners and creditors, aiming to revive the stalled development and mitigate the financial losses endured. The detailed order from the NCLAT is awaited to provide further insights into the rationale behind this significant decision.