The National Company Law Appellate Tribunal (NCLAT) has set aside an insolvency resolution process against property developer DB Realty, renamed as Valor Estate, after the company and its lender Bank of India reached a settlement agreement, said two people familiar with the development.
On Friday, the division bench of Justice Ashok Bhushan and a technical member Barun Mitra in an oral order allowed applications filed by the company’s promoters Vinod Goenka, Shahid Balwa and Asif Balwa to set aside the tribunal’s order after the promoters of the company agreed to pay dues of about Rs 703.35 crores. Detailed order was not available until the time of filing the story.
“Borrower and financial creditor have agreed to file consent terms with NCLAT, New Delhi pursuant to the One Time Settlement entered into between the financial creditor and borrower,” the company said in a regulatory filing. “Accordingly, the creditor shall withdraw any and all other CIRP proceedings instituted, and actions taken by it under any law against the company and others in the said matter and as a result, the NCLT order dated July 4 th, 2023 passed against the company shall be set aside.”
When contacted, Munaf Virjee, founder of law firm AMR Law who represented the realty firm along with advocate Akash Agarwal confirmed the development but refused to divulge any details.
The promoters of the company had originally approached the appellate tribunal to challenge the National Company Law Tribunal (NCLT) order of July 4, 2023, which admitted DB Realty under the Corporate Insolvency Resolution Process (CIRP) and appointment of Prashant Jain as the resolution professional of the company.
In this case, the lender had sanctioned a term loan of Rs 225 crore to DB Realty’s arm Pune Buildtech in September 2013 for the construction of residential towers in Pune’s Yerwada area. DB Realty had extended a guarantee in favour of the Bank of India guaranteeing the repayment of this loan through a Deed of Guarantee.
Pune Buildtech had created a mortgage of three properties including a hotel asset Le Meridien, now Hotel Hilton in Mumbai’s Andheri area in favour of the lender to secure the loan.
The company could not complete the project and stopped construction work around September 2016 due to a shortage of funds. Due to non-payment of interest from August 2015 onwards, the loan account was classified as a non-performing asset (NPA) in December 2015, the bank said in its application.
With no positive response to the notice issued to Pune Buildtech, the financial creditor issued a legal notice on August 14, 2020, invoking a guarantee and calling upon DB Realty to repay the total outstanding debt of over Rs 760 crore.
