The National Company Law Appellate Tribunal (NCLAT) has upheld Adani Goodhomes’ resolution plan to take over the bankrupt real estate company Radius Estates, rejecting challenges from creditors and debenture holders, including ICICI Prudential Venture Capital Fund and Beacon Trusteeship.
Monday’s decision affirms the earlier orders by the Mumbai bench of the National Company Law Tribunal (NCLT), which had approved the resolution plan and dismissed allegations of foul play and collusion.
Creditors had claimed that the resolution professional (RP), Jayesh Sanghrajka, and HDFC Ltd, the largest creditor, colluded, leading to only one bid being received. They demanded a restart of the insolvency process. However, in December 2022, the NCLT Mumbai approved Adani Goodhomes’ bid, citing a lack of evidence for the allegations.
Adani Goodhomes, a subsidiary of Adani Infrastructure and Developers Pvt. Ltd and part of the Adani Group, has offered around ₹76 crore to Radius Estates’ creditors, who have outstanding loans amounting to approximately ₹1,700 crore, resulting in a 96% haircut for the creditors.
Additionally, Adani Goodhomes has promised to complete the residential project in Mumbai at no further cost to the homeowners.
Creditor support
Adani Goodhomes’ bid had received approval from over two-thirds of the company’s creditors before being taken to the NCLT for final approval. Indian insolvency laws mandate that two-thirds of creditors of a bankrupt company must approve a debt resolution process.
Nearly all of the 700 homeowners, holding a third of the voting power in the committee of creditors, had supported the bid, along with financial creditors such as HDFC Ltd and Yes Bank.
Homeowners had collectively advanced ₹800 crore to book their homes. Although homeowners have the same rights as financial creditors, they are counted as a separate class of creditors. Of the ₹1,700 crore claims filed by financial creditors, debenture holders’ claims are estimated at around ₹200 crore.
Radius Estates’ bankruptcy
Radius Estates and Developers Pvt. Ltd. had partnered with MIG (Bandra) Realtors and Builders Pvt. Ltd. to redevelop land in Bandra (East), Mumbai. The project included constructing residential flats for the rehabilitation of members of the Middle-Income Group Co-operative Housing Society and a free-sale component.
However, construction halted in January 2020, leading Beacon Trusteeship Ltd. to file a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process (CIRP) against the company. On April 30, 2024, the NCLT initiated insolvency proceedings against the company.
By the moratorium commencement date, Radius Estates had sold 224 units and had 146 units left for sale, with the project incomplete. Out of the 15 proposed buildings, only nine were partially constructed, and the remaining six had not commenced.
When the resolution professional invited plans, Adani Goodhomes Pvt. Ltd. and Ashdan Developers Pvt. Ltd. submitted proposals. Adani Goodhomes’ plan was approved by the Committee of Creditors with an 83.93% voting share and subsequently received NCLT approval.
A detailed order in the matter is awaited.
