NCLAT upholds Adani Goodhomes' plan for Radius Estate despite creditors' objections

The National Company Law Appellate Tribunal (NCLAT) has upheld the approval of Adani Goodhomes' resolution plan for real estate firm Radius Estate, despite objections from dissenting financial creditors, who raised concerns over a significant haircut of 93 per cent for creditors.

A two-member bench led by the NCLAT Chairman dismissed the petitions filed by two dissenting financial creditors, stressing that the decision to approve the payout to different creditors was within the "commercial wisdom" of the Committee of Creditors (CoC).

Adani Goodhomes, a division of Adani Realty, had its resolution plan approved by the Mumbai bench of the National Company Law Tribunal (NCLT) on January 9, 2022. The plan garnered an 83.99 per cent vote from the CoC and was subsequently sanctioned by the NCLT.

Under the resolution plan, approximately 700 flat owners are set to receive possession without any price escalation. However, dissenting financial creditors, Beacon Trusteeship and ICICI Prudential Venture Capital Fund Real Estate, contested the plan before the NCLAT, arguing its unfairness and inequity due to the substantial haircut on their claims.

Reports indicate that Adani Goodhomes proposed a payment of around Rs 76 crore against total claims amounting to Rs 1,700 crore. Nevertheless, the company committed to completing the construction of the project.

The NCLAT rejected the claims of violation of the Insolvency & Bankruptcy Code (IBC) Section 30(2) and dismissed allegations of irregularities in the valuation process and resolution plan approval.

In its 59-page order, the NCLAT affirmed the NCLT's thorough consideration of relevant factors in approving the resolution plan. It stated that dissenting financial creditors would receive payments as per IBC provisions.

The Corporate Insolvency Resolution Process (CIRP) against Radius Estate was initiated on April 30, 2021, following a plea filed by Beacon Trusteeship Ltd. The project, originally developed by MIG (Bandra) Realtors and Builders, faced construction delays due to financial constraints.

Radius Estates and Developers, contracted to complete the project, encountered obstacles leading to the termination of the agreement by the society and subsequent legal action initiated by Beacon Trusteeship before the NCLT.

(With PTI inputs)