HDIL Gets Partial Respite From NCLAT, In Insolvency Case
Debt-saddled Housing Development and Infrastructure Limited (HDIL) has got some respite, with the National Company Law Appellate Tribunal (NCLAT) coming to its rescue. On September 3, 2019, the NCLAT directed Bank of India to respond to a petition filed by the builder against a National Company Law Tribunal (NCLT) order under which corporate insolvency proceedings were to be started against HDIL. The formation of the committee of creditors has been prohibited for now, and the bank 10 has been given days' time to respond. The appellate tribunal has posted the matter for further hearing on September 26, 2019.
The Mumbai Bench of the National Company Law Tribunal (NCLT), on August 20, 2019, admitted an insolvency plea moved by the Bank of India against the listed builder, in connection with an Rs 522-crore loan default. With that, the Mumbai-based developer, with over four decades of presence in real estate, joined several other developers such as Jaypee and Amrapali that are currently facing insolvency proceedings under various provisions of the Insolvency and Bankruptcy Code (IBC).
The NCLT move could delay work in as many as 10 HDIL-led residential projects, which are in various stages of construction. These include the Majestic Tower (Nahur West), Whispering Tower (Mulund West), Residency Park II (Virar), Premier Exotica (Kurla West), Harmony (Goregaon West), Metropolis Residence (Andheri West), Galaxy Apartments (Kurla East), Paradise City (Pahghar), HDIL Hyderabad, etc.
Apart from the Bank of India, several other financial institutions, including Syndicate Bank, Dena Bank, Corporation Bank, and Indian Bank, have approached the tribunal with similar petitions, indicating that the debt crisis HDIL faces are much deeper. The BSE and NSE-listed developer, which has its presence in residential, commercial, as well as slum redevelopment projects in Mumbai, settled similar petitions moved by the J&K Bank and Andhra Bank in 2016, over dues of Rs 370 crores.
In a BSE listing, HDIL had said that it planned to challenge the NCLT order in the NCLAT, as the default was not willful and the developer had every intention to repay its outstanding liabilities. Responding to Bank of India's plea in June 2019, the NCLT had allowed HDIL to settle the matter, by paying the loan amount in tranches. HDIL, however, failed to pay the first tranche of Rs 98 crores.
“The company has paid more than Rs 800 crores to various other banks. Therefore, we couldn't honour the commitment made to Bank of India," Subir Kumar, the advocate representing HDIL, was quoted by the media as saying.
Earlier, HDIL had invited the Mumbai Slum Rehabilitation Authority’s ire, over its failure to comply with building norms while carrying out rehabilitation work near the airport.