A higher appellate tribunal has set aside a liquidation order passed by the National Company Law Tribunal (NCLT) against Lotus City, a stuck residential project developed by realtor Three C Homes Pvt Ltd (3C).
The Delhi-NCR-based real estate developer once sought after by multiple private equity investors, was headed for liquidation following an NCLT order earlier this year.
After 3C Homes went into bankruptcy in September 2019 on a plea by a homebuyer, one resolution applicant Ace Infrastructure submitted a resolution plan which was approved with 62.9% voting share.
The bankruptcy tribunal had rejected a resolution offer of Rs 95 crore by Ace Infrastructure over a period of two years as it was less than 20% of the liquidation value of Rs 480.70 crore.
Under the plan, farmers were to forgo their claim of Rs 71.66 crore in exchange of the Ace Infrastructure's promise to spend a sum of Rs 15 crore towards the development of village Salarpur, which the court termed as amateurish.
However, Ajay Chaudhary, MD, Ace Group and Lotus City Plot Buyers Welfare Association had challenged the liquidation.
The Lotus City Plot Buyers Welfare Association, represented by advocate Piyush Singh of PSP Legal among others, contested that the NCLT did not include Rs 211 crore i.e. the quantum of debt due to allottees, as per an Economic Times report.
It also did not include discounts of Rs 8.18 crore along with Rs 38.75 crore waived off in satisfaction of interest due to the allottees and additional Rs 50.70 crore agreed by Ace Infrastructure to pay to the ex-management of 3C Homes, the report said.
It further quoted the NCLAT order stating, “While the resolution plan will generally provide a higher value than the liquidation value but in case of real estate project may not be always feasible and homebuyers are in dire need of getting their homes at the earliest.
However, in this case certain reconciliation are required that what is the actual realisable value which the homebuyers are getting whether it is below liquidation value or above it."
Liquidation is the last resort and this programme of homebuyers needs some calibration and proper evaluation, the court added.
There is also a need for Yamuna Expressway Industrial Development Authority (YEIDA) to ascertain status of dispute with farmers and its consequential impact, if any.
The admitted claims of the homebuyers (financial creditors) stood at Rs 118 crore of the claimed Rs 128 crore.