The default concerns the Union Bank of India loan for the Eco Village II project in Greater Noida (West) in Uttar Pradesh
The default concerns the Union Bank of India loan for the Eco Village II project in Greater Noida (West) in Uttar Pradesh
Property developer Supertech was declared bankrupt by the National Company Law Tribunal (NCLT) on Friday, a move that could impact 25,000 homebuyers of the company’s ongoing projects in the Delhi and NCR region.
The bankruptcy court ordered the opening of bankruptcy proceedings against real estate company Supertech Ltd., one of the companies of the Supertech Group, following a request for non-payment of around £432 million submitted by the Union Bank of India.
The NCLT said “there has been a default in the payment of financial debt” and appointed Hitesh Goyal as Interim Resolution Professional (IRP), replacing the board of Supertech Ltd.
A two-strong NCLT bank, made up of PSN Prasad and Rahul Bhatnagar, said documents filed by financial creditor Union Bank of India and corporate debtor Supertech “supported” the former’s claim that there was a debt the contractor defaulted on was.
“In light of the above discussion, after carefully considering the entire matter, hearing the arguments of the parties, and considering the documents on file supporting the claim, this court grants this motion and initiates CIRP against the corporate debtor with immediate effect,” he said NCLT.
CIRP refers to Corporate Insolvency Resolution Process (CIRP).
supertech ltd has 38,041 customers and of these, houses have been delivered to 27,111 people. According to Mohit Arora, Managing Director of Supertech Group, there are still 10,930 homes to be delivered and of that, over 70% of the construction work on over 8,000 homes is complete.
The arbitral tribunal also ordered the IRP to make a public statement in this regard and imposed a moratorium on the company under the provisions of the Insolvency and Bankruptcy Act.
The moratorium will continue until a resolution plan is approved, and during this period no new cases or claims against the Company may be brought before any court, tribunal, arbitral tribunal or other authority.
Otherwise, Supertech is prohibited from transferring, encumbering, alienating or disposing of any assets.
This is the second major setback for Noida-based developers in the last year.
On August 31 last year, the Supreme Court ordered the demolition of Supertech Ltd.’s 40-story twin towers, part of the under-construction Emerald Court project in Noida, for violating building codes.
Supertech Group said it would appeal the decision to the National Company Law Appellate Tribunal (NCLAT).
“Regarding NCLT’s appointment of IRPs at one of Supertech Group’s companies, management has stated that the company will appeal to NCLAT to appeal the order,” Supertech Group said in a statement.
However, it also added that the NCLT order will not affect the operations of other Supertech group companies.
The NCLT contract will not affect construction of any ongoing projects or operations of the company, and “we are committed to delivering units to allocatees,” it said.
When contacted, Mr Arora said: “There are around 11-12 housing projects within Supertech Ltd which are in bankruptcy proceedings. Around 90% of these projects have been completed.” Supertech Ltd’s debt stands at around £1,200m, including almost £150m in loans from the Union Bank of India, he added.
According to Mr Arora, there are three to four other companies in the group developing many projects across Delhi-NCR, including the luxury Supernova project.
The default relates to the Union Bank of India loan to the Eco Village II project at Greate Noida (West) in Uttar Pradesh which was developed at a cost of ₹1,106.45 crore.
In 2013, Supertech Ltd. approached various financial institutions to avail a ₹350 crore credit facility from a banking syndicate and of them the Union Bank of India, the lead bank, had a ₹150 crore exposure.
On December 30, 2013, a loan agreement was finalized between the banks and Supertech.
Later, the bank loan account maintained by Supertech in relation to the line of credit became highly erratic with repeated defaults on principal and interest payments.
Finally, on April 24, 2019, a notice was sent and Supertech again failed to pay and Union Bank of India moved the NCLT.
Supertech had opposed the cause of action, alleging that it was filed by the lenders with the agency and that under the terms of their loan agreement, the lenders are limited to taking any action to seek the borrower’s winding-up, liquidation, bankruptcy, insolvency or dissolution.
Additionally, the NPA classification of her account contradicted guidelines issued by the RBI, the real estate firm claimed.
The NCLT dismissed the argument, saying Suptech submitted a one-off proposed settlement that was not accepted by the financial creditor.
“The lawyer of the corporate debtor has therefore admitted the debt and insolvency,” it said.
