Rs 540 Crore Bid To Ailing Lavasa City's Rescue; CoC To Sit Over Plan
Relief is in sight for the creditors of the Lavasa City with Aniruddha Deshpande-led City Corporation Ltd placing a Rs 540-crore bid to take over the stuck project. However, financial creditors, including homebuyers, may have to settle for a 90 per cent haircut if the committee of creditors accepts City Corporation’s bid.
Earlier, promoter company Hindustan Construction Company (HCC) had said the insolvency tribunal accepted its plea to start proceedings against its debt-ridden real estate arm, Lavasa Corporation.
Before plans for the Pune-based project was shattered due to financial trouble, it was touted to become India’s first privately built smart hill city. The city is one fifth of the size of Greater Mumbai and was planned for a population of three lakh.
Unfortunately, the company is now neck-deep in trouble with outstanding debt of Rs 5,559.14 crore towards creditors and another Rs 400 crore to property buyers.
HCC said the project was severely impacted by an environment ministry notification to stop work for jurisdictional reasons.
The National Company Law Tribunal (NCLT) accepted the plea of the construction company on August 30 to start proceedings under the Insolvency and Bankruptcy Code (IBC). Devendra Prasad had been appointed the interim resolution professional (IRP) for the case however till June 2019, no buyer came forward.
Lavasa Corporation is a joint venture between HCC (68.7 per cent) Avantha Group (17.18 per cent), Venkateshwara Hatcheries (7.81 per cent) and Vithal Maniar (6.29 per cent).
"Lavasa is a very special urban development project and an initiative well ahead of its time. While shareholders' interests have been sacrificed, we are hopeful that the pioneering efforts to grow Lavasa into a thriving smart city will now find stewardship in the hands of a new owner," HCC Director and group CEO Arjun Dhawan said.
A swift resolution through the IBC would benefit all stakeholders, especially customers, who had patiently supported Lavasa through this tumultuous period, he added.
The company has already built over 2,200 apartments and villas, hotels and numerous amenities and services.