Real estate developer Supertech on Friday was declared bankrupt by the National Company Law Tribunal (NCLT), a move that could have a bearing on 25,000 home buyers of the firm's ongoing projects in the Delhi and NCR region.
Acting on a petition filed by the Union Bank of India for non-payment of about ₹432 crore worth dues, the bankruptcy court ordered the initiation of insolvency proceedings against real estate firm Supertech Ltd., one of the companies of Supertech group.
The NCLT said "there has been a default in payment of the financial debt" and appointed Hitesh Goyal as the Interim Resolution Professional (IRP) superseding the board of Supertech Ltd.
A two-member NCLT bench comprising P. S. N. Prasad and Rahul Bhatnagar said the documents submitted by the financial creditor Union Bank of India as well as the corporate debtor Supertech had "substantiated" the former's claim that there was a debt on which the builder had defaulted.
"In light of the above discussion, after giving careful consideration to the entire matter, hearing arguments of the parties and upon the appreciation of the documents placed on record to substantiate the claim, this tribunal admits this petition and initiates CIRP on the corporate debtor with immediate effect,” the NCLT said.
CIRP refers to Corporate Insolvency Resolution Process (CIRP).
Supertech Ltd. has 38,041 customers and out of them, homes have been delivered to 27,111 people. As many as 10,930 homes are yet to be delivered and among them, over 70% construction is complete with respect to over 8,000 homes, according to Supertech Group Managing Director Mohit Arora.
The tribunal has also directed the IRP to make a public announcement in this regard and declared a moratorium against the company as per the provision of the Insolvency & Bankruptcy Code.
Moratorium will continue till a resolution plan is approved and during that period no new cases or claims can be filed against the company in any court of law, tribunal, arbitration panel or any other authority.
Apart from this, Supertech is also barred from transferring, encumbering, alienating, or disposing of any assets.
This is the second major setback for Noida-based developers in the last one year.
On August 31 last year, the Supreme Court had ordered the demolition of Supertech Ltd.'s twin 40-storeyed towers, which are part of the under-construction Emerald Court project in Noida for violation of building norms.
Supertech Group said it would challenge the order before the National Company Law Appellate Tribunal (NCLAT).
"In the matter of appointment of IRP in one of the Supertech Group companies by the NCLT, management of the company stated that the company will be approaching NCLAT in an appeal against the order," Supertech Group said in a statement.
However, it also added the NCLT order will not affect operations of other companies of the Supertech Group.
The NCLT order will not impact the construction at all ongoing projects or operation of the company and "we are committed to giving delivery of units to allottees," it said.
When contacted, Mr. Arora said, "there are around 11-12 housing projects in the Supertech Ltd. against which insolvency proceedings have been initiated. Around 90% of these projects are completed." The debt of Supertech Ltd is about ₹1,200 crore, including nearly ₹150 crore loans from Union Bank of India, he added.
According to Mr. Arora, there are three-four other companies in the group that are developing many projects across Delhi-NCR, including luxury project Supernova.
The default pertains to the loan given by Union Bank of India to Eco Village II project at Greate Noida (West) in Uttar Pradesh, which was being developed at a cost of ₹1,106.45 crore.
In 2013, Supertech Ltd. had approached various financial institutions to avail a credit facility of ₹350 crore from a consortium of banks, and out of them, Union Bank of India, the lead bank, had an exposure of ₹150 crore.
A loan agreement was executed between the banks and Supertech on December 30, 2013.
Later, loan account of banks which was maintained by Supertech in respect of credit line became highly irregular with repeated defaults in payment of principal and interest.
Finally, a notice was sent on April 24, 2019 and Supertech again failed to pay and Union Bank of India moved the NCLT.
Supertech had opposed the plea contending that it was filed by the lenders with the authority and as per the clauses of their inter credit agreement, lenders are restricted to initiate any action of winding up, liquidation, bankruptcy, insolvency or dissolution of the borrower.
Moreover, NPA classification of their account was contrary to the guidelines issued by RBI, as per the realty firm contended.
Rejecting the argument, the NCLT said Suptech had submitted a one time settlement proposal which was not accepted by the financial creditor.
"The counsel for the corporate debtor has therefore admitted the debt and default," it said.
