Adani Goodhome's Resolution Plan Moves Forward For Radius Estate Despite Legal Challenges

                The Supreme Court on Friday declined to stay 
the resolution plan of Adani Goodhomes, a 
subsidiary of Adani Infrastructure and 
Developers, to acquire the insolvent real estate 
company Radius Estates.


The bench, comprising Justices Sanjiv Khanna 
and Sanjay Kumar, issued a notice to Adani 
Goodhomes and other parties, including the 
dissenting creditor Beacon Trusteeship, which 
challenged the plan in the Supreme Court after 
it was upheld by the NCLAT. Beacon 
Trusteeship claimed the plan imposed an 
around 93% haircut on its claims.

The case will be heard again in January 2025.


This case highlights the ongoing issue of 
substantial haircuts taken by lenders in 
insolvency resolutions.

The Congress party, on 4 September 2024, 
raised concerns based on data from the All 
India Bank Employees Association (AIBEA), 
which revealed that public sector banks took a 
74% haircut on their outstanding dues from 10 
financially stressed companies after 
they were acquired by the Adani Group.

In this case on 27 May, the National Company 
Law Appellate Tribunal (NCLAT) upheld Adani 
Goodhomes' plan to take over Radius 
Estates, rejecting challenges from dissenting 
creditors includes ICICI Prudential Venture 
Capital Fund and Beacon Trusteeship. This 
decision reaffirmed an earlier order from the 
Mumbai bench of the National Company Law 
Tribunal (NCLT), which had approved the 
plan and dismissed allegations of collusion.


Dissenting creditors, such as Beacon 
Trusteeship, alleged that the resolution 
professional (RP), Jayesh Sanghrajka, and 
HDFC Ltd, the 
largest creditor, colluded, resulting in only one 
bid being received. They demanded a restart of 
the insolvency process, but the NCLT 
Mumbai approved Adani Goodhomes' bid in 
December 2022, citing insufficient evidence for 
these claims.

Financial creditors' loss, homebuyers' gain
The Resolution Plan violated Section 30(2) of 
the Code, according to dissenting creditors. 
They argued it was unfair because it 
imposed a 93% haircut on secured financial 
creditors while providing 100% recovery to 
homebuyers through allotted units without 
reductions or price increases. They also 
criticized the RP for expediting the Corporate 
Insolvency Resolution Process (CIRP) and 
pressuring the Committee of Creditors (CoC), 
alleging that the incomplete Valuation Report 
hindered an informed decision.

Adani Goodhomes has offered approximately 
₹76 crore to Radius Estates' creditors, who 
have claims totalling around ₹1,700 crore, 
resulting in a 93% haircut for the creditors, 
accoding to media reports.
The resolution plan received support from over 
two-thirds of the creditors, including nearly all 
of the 700 homeowners, as well as 
financial creditors like HDFC, Yes Bank Ltd, 
Piramal Capital & Housing Finance Ltd, Infinite 
Buildcon Private Ltd, and ICICI Bank Ltd.
ICICI Prudential Venture Capital Fund, and 
Beacon Trusteeship were the only dissenting 
creditors who challenged the plan, citing foul 
play. Their challenges were rejected by both 
the NCLT and NCLAT, prompting them to 
escalate the matter to the Supreme Court.

Homeowners had collectively advanced 
around ₹800 crore to book their homes. 
Although they are considered a separate class 
of 
creditors, they have the same rights as 
financial creditors. Of the ₹1,700 crore claims 
filed by financial creditors, debenture holders' 
claims are estimated at around ₹200 crore.
Adani Goodhomes has also committed to 
completing the residential project in Mumbai 
at no additional cost to the homeowners. 
Following the plan's approval, Adani 
Goodhomes infused ₹450 crore as interim 
finance by 31 December 2021, which was used 
for dues 
payment, FSI premiums to the Municipal 
Corporation of Greater Mumbai (MCGM), and 
the commencement of construction.

Radius Estates' bankruptcy
Radius Estates and Developers Pvt. Ltd. had 
partnered with MIG (Bandra) Realtors and 
Builders Pvt. Ltd. to redevelop land in Bandra 
(East), Mumbai. The project aimed to construct 
residential flats for the rehabilitation of 
members of the Middle-Income Group Co-
operative Housing Society, along with a free-
sale component. However, construction halted 
in January 2020, leading Beacon 
Trusteeship Ltd. to file a petition under Section 
7 of the Insolvency and Bankruptcy Code, 
2016, initiating the Corporate Insolvency 
Resolution Process. On 30 April 2024, the 
NCLT initiated insolvency proceedings.
At the start of the moratorium, Radius Estates 
had sold 224 units and had 146 units left for 
sale. Out of the 15 proposed buildings, only 
nine were partially constructed, while the 
construction for the remaining six had not yet 
begun. When the resolution professional 
invited plans, Adani Goodhomes and Ashdan 
Developers submitted proposals. Adani 
Goodhomes' plan was approved by the 
Committee of Creditors with an 83.93% voting 
share and received NCLT approval.


Source: Mint