NCLT approves Ashdan Developers’ resolution plan for D S Kulkarni Developers, ET RealEstate

July 5, 2023

The National Company Law Tribunal has approved Ashdan Developers-led consortium’s insolvency resolution plan for debt-laden real estate developer D S Kulkarni Developers. The successful consortium proposes to make a payment of Rs 826.30 crore to the developers’ stakeholders.

Apart from Ashdan Properties, the consortium also includes Classic Promoters & Builders and Atul Builders. The resolution professional had received three bids for the resolution from entities including Mantra Properties & Developers and Hemendra Shah-led consortium.

The successful resolution plan of Ashdan Developers-led consortium will pay secured creditors, unsecured creditors, and operational creditors. The homebuyers will be given flats against their claim amount.

Senior counsel Vikram Nankani and advocate Shyam Kapadia appeared for the successful resolution applicant and informed the tribunal that the amount includes an upfront payment of Rs 30.12 crore, as well as Rs 536.18 crore in Series-I non-convertible debentures (NCDs) and Rs 260 crore in Series-II NCDs.

The plan is approved by over 83.3% of the lenders represented by the committee of creditors (CoC), which includes State Bank of India, ICICI Home Finance Company, Bank of Maharashtra, Bank of India, IDBI Bank, Tata Capital Housing Finance and homebuyers.

Based on an application filed by lender Bank of Maharashtra, the Mumbai bench of National Company Law Tribunal (NCLT) had in September 2019 ordered the commencement of corporate insolvency resolution process (CIRP) with respect to D S Kulkarni Developers under the provisions of the Insolvency and Bankruptcy Code, 2016.

Over 700 homebuyers across five stalled projects have been awaiting possession of their homes in various projects of the company that has developed projects in Pune, Mumbai, Bengaluru, Nashik and New Jersey in the US.

Lenders and operational creditors of the beleaguered developer had claimed around Rs 1,750 crore, of which nearly Rs 1,050 crore is from 12 banks and other financial institutions. These financial creditors hold around 66.7% voting rights in the committee of creditors.

The CoC has held 25 meetings in total so far and has seen adjournment of six meetings of lenders of the company.

Insolvency and bankruptcy cases of real estate companies have witnessed a steady progress in terms of resolutions despite several complexities involved including troubled homebuyers in large numbers.

A total of 6,571 companies across sectors were brought into administration until March-end this year, showed the latest data from the Insolvency & Bankruptcy Board of India (IBBI). Of these, around 21% or 1,380 companies were from the real estate sector, of which 854 or nearly 62% companies have seen a successful resolution plan since the inception of the Insolvency & Bankruptcy Code (IBC) in 2016.

As demand for residential and commercial properties picks up, several strategic buyers and investors are actively scouting for real estate companies with large land parcels currently under bankruptcy administration for loan defaults, especially in cities.

Despite the challenge of insolvency, these companies and their projects are still finding good interest from investors given the presence of tangible assets including land parcels and unfinished structures with a certain portion of sales achieved.

  • Published On Jul 5, 2023 at 09:01 AM IST

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