In Short:
The National Company Law Tribunal (NCLT) dismissed Darwin Platform Infrastructure Ltd’s resolution plan for Lavasa Corp, allowing creditors to resume insolvency proceedings. The tribunal criticized DPIL for failing to act on the approved plan and upheld the invocation of a ₹25 crore bank guarantee due to non-compliance. Homebuyers also expressed concerns about DPIL’s financial capability to execute the plan successfully.
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<h1>An Unfolding Drama: Lavasa Corp’s Insolvency Journey Takes a New Twist</h1>
<p>Mumbai is witnessing a significant plot twist in the insolvency saga of <strong>Lavasa Corp.</strong>. The Mumbai bench of the <strong>National Company Law Tribunal (NCLT)</strong> has dismissed the resolution application from <strong>Darwin Platform Infrastructure Ltd (DPIL)</strong> aimed at acquiring the picturesque hill station. In a surprising turn of events, the tribunal has also granted creditors the green light to revive the insolvency process, ensuring that Lavasa can continue as a going concern.</p>
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<h2>Citing Inaction, NCLT Makes a Bold Move</h2>
<p>In an order issued this past Friday, the tribunal weighed in on the creditor’s petition against DPIL. The NCLT expressed its deep concerns, stating, “We found that the successful resolution applicant (SRA) has miserably failed to take any positive action to implement the approved resolution plan without any justifiable reasons. Therefore, no purpose would be served by granting further time to the SRA for implementation of the resolution plan.” In essence, the tribunal has rendered the plan approval application redundant due to DPIL’s inability to act.</p>
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<h2>Performance Bank Guarantees Under Fire</h2>
<p>Further complicating matters, the tribunal backed the creditors' decision to invoke performance bank guarantees (PBG) amounting to <span class="webrupee">₹</span>25 crore from DPIL, citing serious non-compliance during the insolvency proceedings.</p>
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<h2>NCLT Holds DPIL Accountable</h2>
<p>The court highlighted the gravity of the situation, stating, "We are further of the considered view that since the SRA is blatantly and consciously responsible for the failure of implementation of the Approved Resolution Plan, its inevitable consequence is the invocation of PBG furnished by SRA. Therefore, we hold that the PBG has been rightly invoked and encashed by the Union Bank, and there is nothing illegal or improper in the same."</p>
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<h2>Homebuyers Push Back</h2>
<p>Additionally, the tribunal has dismissed the resolution application by DPIL in various petitions brought forward by concerned homebuyers, reflecting growing dissatisfaction among them.</p>
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<p><i>Mint</i> has examined copies of the tribunal's orders.</p>
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<h2>A Year in the Making</h2>
<p>This latest ruling comes almost a year after the NCLT initially approved the resolution plan in question. However, trouble began brewing in October when <strong>Union Bank</strong> sought to withdraw its NCLT approval, alleging collusion between resolution professional <strong>Shailesh Verma</strong> and DPIL, which they claimed had resulted in the undervaluation of Lavasa’s real estate assets and financial losses for the creditors.</p>
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<h2>Appeals and Counter Appeals</h2>
<p>The NCLT dismissed Union Bank’s allegations, yet the saga didn’t end there. Shortly after, <strong>State Bank of India</strong> filed an appeal with the <strong>NCLAT</strong> in November, echoing similar concerns, which ultimately was dismissed by the appellate tribunal.</p>
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<h2>Background of the Situation</h2>
<p>Earlier this year in April, <strong>ICICI Bank</strong>, representing the creditors, activated the <span class="webrupee">₹</span>25 crore guarantee due to DPIL's failure to implement the resolution plan. This action stemmed from DPIL’s inability to make an upfront payment of <span class="webrupee">₹</span>100 crore within the crucial 90-day timeframe following the NCLT approval.</p>
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<h2>Resolving the Vision for Lavasa</h2>
<p>Back in December 2021, DPIL had proposed a sizeable investment of <span class="webrupee">₹</span>1,814 crore over eight years aimed at bolstering lenders and constructing homes in the Lavasa region.</p>
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<h2>Concerns from Homebuyers</h2>
<p>Homebuyers have voiced serious concerns regarding DPIL's financial health. As reported by <i>Mint</i> in December, these buyers accused DPIL of understating liabilities and exaggerating reserves and surplus. They lamented that the company appears neither equipped with the necessary resources nor the management expertise needed to effectively carry out the resolution plan.</p>
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