Union Bank contests NCLT-approved plan for Lavasa Corp, seeks revocation, ET RealEstate

October 5, 2023

MUMBAI: State-owned Union Bank of India has objected to the loan-default resolution of Lavasa Corp, billed as the first private hill-town project to be built since Independence, less than two months after the National Company Law Tribunal approved the revival plan submitted by Darwin Platform Infrastructure (DPIL).

The lender has sought withdrawal of NCLT approval alleging connivance between the resolution professional (RP) Shailesh Verma and the winning bidder to undervalue the real estate assets of Lavasa, resulting in a loss to creditors of the company. It is also seeking a direction to the RP to obtain a fresh valuation of the assets and invite fresh applications based on the new valuation. ET has a copy of the petition dated September 16.

“In spite of clear directions from this Tribunal to place the modified or fresh resolution plan before the consolidated CoC (committee of creditors) for their consideration, the respondent no 1 (Verma) with malafide intention and in connivance with the respondent 2 (DPIL) instead of placing the modified or fresh resolution plan and without taking into account valuation of assets of the debtor at that point of time, or February 2023,” which the bank’s petition said misrepresented facts.

Darwin Platform’s final plan submitted in December 2021 had envisaged a total payout of ₹1,814 crore over eight years to lenders and for delivering fully constructed houses to 837 home buyers, at a haircut of about 79% to financial creditors. The bank now says that the plan was based on valuations done in 2018 and does not consider the improved real estate prospects since then. DPIL did not reply to an email seeking comment.

Replying to an email the RP said “the whole process was carried out, as per the law, and with all the required approvals”.

In its petition, Union Bank is referring to the NCLT order in February 2023 which directed the CoC to treat government and other statutory dues on a par with financial creditors who had a 20.5% recovery. It says that instead of reworking the resolution plan based on the February valuations, the RP adjusted the government dues based on the November 2021 plan just before it was approved by the CoC, which violated the court’s order and caused losses to creditors. Union Bank’s opposition to the plan comes almost two years after the CoC had approved it with an overwhelming majority of 96.4% in December 2021, following which it took another one-and-a-half years to get the court’s nod.”The bank thinks that the real estate valuations post Covid have risen sharply as reflected in the registrations in and around Mumbai By valuing it at the 2018 levels the RP has caused creditors a loss on the net present value (NPV). The bank has been assessing this case closely and now has thought it fit to file a petition,” said a person aware of the details.

Union Bank, the leader of a group of 17 member creditors with ₹722 crore of dues and a 12% vote share, has also sought to restrain Verma and Darwin Platform from implementing the resolution plan. The bank did not respond to an email seeking comment.

Lavasa was sold as India’s first privately built and managed city at the turn of the century, targeting rich urban natives from Mumbai and Pune wanting to escape the noise and pollution of their cities. Modelled after the Italian fishing village, Portofino, it was planned like a gated city with space for a golf course, rowing and even a football academy.

However, it went bust in 2018 after defaulting on payments to creditors. Total dues to financial creditors are at more than ₹6,000 crore for Lavasa and four smaller subsidiaries.

  • Published On Oct 5, 2023 at 09:14 AM IST

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