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NCLT admits insolvency resolution petition against Mumbai-based developer Nirmal Lifestyle

A dedicated bankruptcy court in Mumbai has admitted an insolvency resolution petition against the city-based real estate development firm Nirmal Lifestyle and has appointed Ajit Gyanchand Jain as its interim resolution professional (IRP) to run the company’s day-to-day affairs.

The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted the company under the Corporate Insolvency Resolution Process (CIRP) 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.

A division bench of the tribunal headed by judicial member HV Subba Rao and technical member Chandra Bhan Singh passed the order on August 5. The order was uploaded on its website on Wednesday.

“The financial creditor successfully proved the existence of the debt and default and the debt is also within limitation. Thus, the present company petition satisfies all the necessary requirements for admission,” observed the tribunal in its five-page order.

As per the tribunal’s order, 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 has now defaulted on this guarantee.

The court, while passing an order, noted that Nirmal Lifestyle’s counsel Simil Purohit submitted that the company is in the process of settling the claims of all creditors and some time may be granted.

“Since the respondent/corporate debtor did not file any reply, the claim of the financial creditor remains unchallenged,” observed the tribunal.

“This bench hereby prohibits…transferring, encumbering, alienating or disposing of by the corporate debtor (Nirmal Lifestyle) any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property,” observed the tribunal.

When contacted, Rohit Gupta, counsel for IDBI Trusteeship confirmed the development.

According to Ashok Paranjpe, Managing Partner of law firm MDP & Partners, who are solicitors for Nirmal Lifestyle, consent terms between the financial creditor and Nirmal for settlement of disputes have been executed. “We’ve filed an appeal in NCLAT against the order passed by NCLT,” Paranjpe said

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.

This is the second major realty firm from Maharashtra to be admitted under the bankruptcy laws. Pune-based Kumar Urban Development was also admitted into NCLT in May on a petition filed by

Trustee after the company defaulted on its dues of about Rs 432 crore.

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