NCLAT Suspends Liquidation of Three C Homes

Liquidation - recourse for the insolvency resolution process - Residential project - NCLAT - liquidation of Three C Homes - Taxscan

While suspending the liquidation of Three C Homes and referring the matter back to the National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal (NCLAT), Delhi Bench ruled that the liquidation was the last resort for the process. resolution of the insolvency of any residential project.

The NCLT had rejected the resolution plan of the appellant, Ace Infracity Developers for Three C Homes, and ordered its resolution professional (RP) Gaurav Katiyar to initiate the liquidation process by filing a claim before it. The NCLT had observed that the liquidation value of Three C Homes was Rs 480.70 crore, while the resolution plan of Ace Infracity Developers involves the infusion of only Rs 95 crore by the bidder and that too over a period of time. two years.

Mr. Sumesh Dhawan, counsel for the appellant that NCLT did not take into account the impact of calculations such as Rs 211 crore, the amount of debt owed to the beneficiaries as after giving possession of the plots to the beneficiaries , Rs 50.70 crore payable by resolution Plaintiff to ex-management and Rs 38.75 crore waived for satisfaction of interest owed to beneficiaries.

The appellant also stated that the resolution plan was approved with 62.9% of the voting rights, which would be considered 100% in accordance with Article 25A (3A) of the Code in favor of the “resolution plan” . They also raised the issue that the decision of the CoC on trade matters cannot be challenged by the competent authority.

Judicial member coram Judge Jarat Kumar Jain and technical member Dr Ashok Kumar Mishra observed that while the resolution plan will generally provide a value greater than the liquidation value, but in case of real estate project it may not not always be possible and home buyers are in dire need of getting their homes at the earliest. However, in this case, some reconciliations are needed to determine what the actual realizable value buyers are getting, whether it is below or above the liquidation value.

The Tribunal declared that it was also necessary to examine the CIRP Regulation (4th amendment) 2020 notified on 07.08.2020 and the 5th meeting of the CoC broadcast on 04.08.2020 and held on 08.08.2020. It is necessary to implement the Yamuna Expressway Industrial Development Authority (YEIDA) to determine the status of the dispute with the farmers and its impact, if any, on these projects. Liquidation is the last resort and this buyers program needs proper calibration and evaluation.

“We refer the matter back to the adjudicating authority and rescind their liquidation order with instructions to review the entire program as well as the relevant provisions of the code and regulations, then the adjudicating authority is free to make the appropriate order. as it sees fit. and in accordance with the law. Pending RNs, if any, are eliminated. Any interim orders passed by this appeals tribunal are set aside, “NCLAT said.

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