The National Company Law Tribunal (NCLT) has admitted a petition filed by Phoenix Asset Reconstruction Company to initiate Corporate Insolvency Resolution Process (CIRP) against real estate company Precision Realty Developers.
The financial creditor had moved the bankruptcy court against the property developer following a default of nearly Rs 119 crore.
In February 2017, L&T Finance had sanctioned a loan of Rs 200 crore in favour of the original borrowing entity Kaa Vee Retail Infra, which was later merged with Precision Realty Developers.
Nishit Dhruva, managing partner of law firm MDP & Partners and advocate Yash Dhruva, while appearing for Phoenix ARC, informed the tribunal that the loan was sanctioned for the purchase of fixed assets for leasing out to Future Retail. In March 2017, Future Retail had engaged Kaa Vee Retail for the supply of moveable fixed assets for setting up of various retail outlets and formats. The loan was to be repaid at an interest rate of 11.8% per annum, payable monthly.
To facilitate the debt, an exclusive charge was created through a hypothecation deed on the assets procured out of the facility. Additionally, an escrow of lease rental and all other dues from the lessee under the tripartite agreement was executed amongst Kaa Vee Retail, Future Retail and L&T Finance.
Following the merger of Kaa Vee Retail and Precision Realty in 2019, the borrower had sought for a modification in the terms of debt agreement with respect to certain call/put option.
Source: Economic Times