NCLAT Holds Decision for Supertech Settlement Offer on Supernova Project

The National Company Law Appellate Tribunal (NCLAT) announced on Wednesday that it will wait for lenders to decide on a revised settlement offer by Supertech Realtors. This company is developing residential apartments, offices, retail spaces, and luxury hotels at its Supernova project. The tribunal also instructed the Interim Resolution Professional (IRP) not to form a Committee of Creditors but allowed construction to continue under IRP supervision.

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Supertech Realtors has submitted a one-time settlement (OTS) proposal, which the lead bank has principally agreed to. This proposal is currently under review by a consortium of banks. The NCLAT bench noted that the construction work should proceed under the IRP's supervision, with full cooperation from the Corporate Debtor and its employees.

Bank Accounts and Interim Orders

The tribunal specified that Supertech Realtors' bank accounts should be operated only with the joint signature of the IRP to ensure funds are used solely for construction. This interim order came during an appeal filed by Ram Kishore Arora, a director of the suspended board of Supertech Realtors, challenging a previous order by the National Company Law Tribunal (NCLT).

A Delhi bench of NCLT had admitted an insolvency plea filed by the Bank of Maharashtra over a default of Rs 168.04 crore. Anju Agarwal was appointed as the interim resolution professional (IRP), and the board of Supertech Realtors was suspended. The appellate tribunal has issued notices asking lenders to file replies within three weeks and scheduled further hearings for August 8, 2024.

Project Details and Financial Issues

Supertech Realtors is developing the Supernova project at a cost of Rs 2,326.14 crore on a 70,002 square metre plot in Sector 94, Noida. The project will feature 80 floors and will be the tallest building in Delhi-NCR at 300 metres. However, Supertech is also undergoing a Corporate Insolvency Resolution Process (CIRP).

During NCLAT proceedings, Supertech Realtors' counsel stated there was no dispute regarding the debt and default to Bank of Maharashtra. The realty firm has proposed settling dues through an investor, Kotak Advisors Ltd., via an asset reconstruction company's sale.

Settlement Proposal and Lender Meetings

Supertech Realtors offered 75 per cent of the running ledger book balance to consortium lenders. The lead bank acknowledged receipt of this revised proposal. A meeting held on March 18, 2024, included participation from Bank of Maharashtra and Union Bank of India, which principally agreed with the proposal.

However, representatives from Bank of Maharashtra requested time to consult their head office before making a final decision. Supertech Realtors argued that since the lead bank had accepted the proposal in principle, initiating a Corporate Insolvency Resolution Process would serve no purpose.

Project Completion and Investor Involvement

Supernova Project is reportedly 80 per cent complete, with an investor offering additional funds for its completion. However, Bank of Maharashtra's counsel pointed out that a previous OTS proposal approved by the bank was not honoured by Supertech Realtors.

The NCLAT stated: "In the facts of the present case, we are of the view that the revised OTS proposal, which was submitted by Corporate Debtor and which is under consideration of the Consortium of Bank and lead Bank having principally agreed with the offer, it is appropriate to await the decision of Consortium of Members and the decision of lead Bank, with regard to OTS proposal in order to proceed further in the matter."

Future Hearings and Financial Discipline

The appellate tribunal observed that more than 600 unit holders have been allotted units in Supernova. The remaining project will be completed with funds infused by Kotak Advisors Ltd., as per the agreed offer.

The tribunal concluded that it is necessary to wait for decisions from both the Consortium of Banks and the lead bank on Supertech Realtors' revised offer before proceeding further. The appeal will be heard after four weeks to allow parties to present decisions from Joint Lenders Meetings.

In December 2012, Supertech Realtors received a term loan of Rs 150 crore repayable in quarterly installments over ten years and four months by March 2023. However, financial discipline was not maintained, leading to significant outstanding amounts due to breaches and violations of credit limits.