NCLT Revives Lavasa City Insolvency: Dismisses Darwin Platform’s Bid for Resolution

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NCLT Revives Lavasa City Insolvency: A Major Setback for DPIL’s Resolution Plan

Mumbai, September 14, 2024 – In a significant development, the National Company Law Tribunal (NCLT) has revived the insolvency proceedings for Lavasa City, dismissing the resolution application filed by Darwin Platform Infrastructure Ltd (DPIL). This decision comes as a relief to over 500 homebuyers who had petitioned against DPIL’s failure to implement the approved resolution plan.

Background of Lavasa City’s Insolvency

Lavasa City, envisioned as a private hillside resort in Mulshi taluka of Pune district, was once a promising project. However, financial difficulties led to its insolvency, and the project was admitted for insolvency by the NCLT in August 2018. The Mumbai-based DPIL was selected as the successful resolution applicant in December 2021, with a bid of ₹1,814 crore approved by the committee of creditors (CoC).

Despite the initial optimism, DPIL failed to implement the resolution plan, leading to significant delays and frustration among stakeholders. The homebuyers, who had invested in properties that remained incomplete, were particularly affected. Their petition highlighted DPIL’s inability to take positive action towards fulfilling the resolution plan.

NCLT’s Decision

The NCLT’s Mumbai Bench, comprising Anil Raj Chellan (technical member) and Kuldip Kumar Kareer (judicial member), dismissed DPIL’s resolution application, citing the company’s failure to implement the plan without justifiable reasons. The tribunal ordered the revival of the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code (IBC), with Shailesh Verma appointed as the resolution professional.

The tribunal’s order stated, “No purpose would be served by granting further time to the SRA (successful resolution applicant) for implementation of the approved resolution plan. Any further delay in the resolution of the corporate debtor would not only severely affect the interest of various stakeholders but would also render the resolution impossible”.

Implications for Stakeholders

Homebuyers: The NCLT’s decision is a significant victory for the more than 500 homebuyers who had filed the petition. Their interests were at the forefront of the tribunal’s considerations, and the revival of the insolvency process offers renewed hope for the completion of their properties.

Investors: For investors, the decision underscores the importance of accountability and timely implementation of resolution plans. The failure of DPIL to adhere to the plan has highlighted the risks involved in such large-scale projects.

Darwin Platform Infrastructure Ltd (DPIL): The dismissal of DPIL’s resolution application is a setback for the company. The tribunal’s decision to invoke performance guarantees worth ₹25 crore from DPIL further emphasizes the consequences of non-compliance with the insolvency process.

Next Steps and Broader Impact

The revival of the CIRP means that the search for a new buyer for Lavasa City will restart. This process will be closely monitored by stakeholders, including homebuyers and creditors, who will be keen to see a resolution that addresses their concerns.

In the broader context, the NCLT’s decision highlights the challenges and complexities of India’s real estate and insolvency landscape. It underscores the need for stringent adherence to resolution plans and the importance of protecting the interests of all stakeholders involved.

As Lavasa City moves forward in its insolvency resolution process, the case will serve as a critical reference point for future real estate projects and insolvency proceedings in India.

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