Appellate Tribunal stays NCLT order to admit DB realty for insolvency, ET RealEstate

July 7, 2023

The The National Company Law Appellate Tribunal (NCLAT) on Thursday stayed a bankruptcy court order to admit an insolvency resolution plea against listed real estate developer DB Realty.

An NCLAT division bench of Justice Ashok Bhushan and a technical member Barun Mitra has posted the matter for further hearing on September 6.

DB Realty had approached the appellate tribunal to challenge the National Company Law Tribunal’s July 4 order to admit Bank of India‘s corporate insolvency resolution process (CIRP) plea against the company.

Detailed order of the appellate tribunal was not available until the time of filing the story.

“The company will have to deposit ₹387 crore within 90 days as per its earlier one-time-settlement (OTS) offer (to Bank of India),” a person aware of the development told ET. “The company has offered full recovery of principal plus interest at MCLR to the bank and the bank is currently considering the said proposal.”

Senior counsel Mukul Rohatgi, who appeared before NCLAT for the promoters of DB Realty along with senior advocate Arun Kathpalia and Akash Agarwal of ABH Law, confirmed the development.

DB Realty, in an email response to ET’s query, said it believes it has a good case as the company “is not the borrower in this case”.

“However, the principal borrower, Pune Buildtech P, has undertaken to pay the dues of the bank as per the proposal submitted by it, within 90 days,” it said.

Bank of India declined to comment. Pune Buildtech is a subsidiary of DB Realty. Email query to Bank of India remained unanswered till press time Thursday.

Earlier this week, NCLT had admitted Bank of India’s petition to initiate an insolvency resolution process against DB Realty and appointed Prashant Jain as its resolution professional.

The public sector bank had filed the application claiming a default of ₹760 crore as on September 30, 2022, and interest thereon. The date of default was stated as August 30, 2015. The lender had sanctioned a term loan of ₹225 crore to Pune Buildtech in September 2013 for construction of residential towers in Pune’s Yerwada area. DB Realty had extended a guarantee for the loan.

The company could not complete the project and stopped construction work around September 2016 due to shortage of funds. Due to non-payment of interest from August 2015 onwards, the loan account was classified as non-performing asset (NPA) in December 2015, the bank said in its application.

With no positive response to the notice issued to Pune Buildtech, the financial creditor issued a legal notice in October 2022 invoking guarantee and calling upon DB Realty to repay the total outstanding debt of over ₹760 crore.

  • Published On Jul 7, 2023 at 09:07 AM IST

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