The National Company Law Tribunal (NCLT) has allowed withdrawal of insolvency proceedings against real estate development firm Nirmal Lifestyle and has also lifted a moratorium on the company. Nirmal Lifestyle has entered into a separate settlement agreement with the financial creditor.
The Mumbai bench of the NCLT had admitted the company under the Corporate Insolvency Resolution Process (CIRP) last year based on a petition filed by IDBI Trusteeship Services, on behalf of Altico Capital, after the company defaulted on its dues worth Rs 286 crore.
Another financial creditor SREI Equipment Finance and a homebuyer had separately opposed the withdrawal of insolvency proceedings against the company.
Advocate Darshit Dave of law firm AVP Partners, while appearing on behalf of the company’s other financial creditor SREI Equipment Finance had objected to the withdrawal of the CIRP against the Nirmal Lifestyle.
The Kolkata-based lender had argued through its counsel that the developer owes over Rs 100 crore to the company and its similar plea before the other bench in NCLT is also pending.
“The withdrawal of CIRP will prejudicially and directly affect all stakeholders including homebuyers,” argued Dave on behalf of Srei Equipment Finance.
However, the NCLT Mumbai bench has held that these objections were not sustainable while allowing the withdrawal of insolvency proceedings.
When contacted, Ashok Paranjpe, managing partner of law firm MDP & Partners, appearing for Nirmal Lifestyle, confirmed the development but refused to divulge any details.
A division bench of the tribunal headed by judicial member HV Subba Rao and technical member Chandra Bhan Singh passed the order on Monday.
As per the tribunal’s order last year, the Mumbai-based builder had approached Altico Capital to extend refinancing facilities of about Rs 300 crore through Non-Convertible Debentures (NCDs).
Nirmal Lifestyle had also availed a term loan of Rs 1,120 crore from Altico and had issued a guarantee in relation to the term loan of Rs 1,280 crore by another affiliate firm Nirmal Lifestyle Holdings on March 27, 2019. The company had now defaulted on this guarantee.
The court, while passing the order last year, had noted Nirmal Lifestyle’s submission that the company was in the process of settling the claims of all creditors and some time may be granted.
Promoted by Dharmesh Sardarmal Jain, Nirmal Lifestyle has a major presence in Mulund, a central suburb of Mumbai. In 2012, the builder partnered with the United States Tennis Association (USTA) to develop US Open branded residences in Mulund.