NCLT allows consolidation of Lavasa Corporation’s subsidiaries for faster resolution

The dedicated bankruptcy court has approved the request of lenders to Lavasa Corporation to consolidate the township developer and its wholly owned subsidiaries Warasgaon Assets Maintenance and Dasve Convention Centre as one.

A consolidated entity will get better valuation when they are liquidated under the corporate insolvency resolution process (CIRP), the lenders had told the Mumbai bench of National Company Law Tribunal (NCLT).

“Any standalone resolution does not seem to be possible and would therefore defeat the objective of the code (Insolvency and Bankruptcy Code), which is to maximise the value of the company,” NCLT division bench of Suchitra Kanuparthi and Chandra Bhan Singh said in its order issued on Wednesday.

WAML was incorporated to design, develop, construct, operate and maintain transportation infrastructure and project facility at the Lavasa hill station township near Pune, while DCCL was incorporated for running and maintaining the Dasve Convention Centre at Lavasa.

Currently, all three companies are under CIRP.

“The interlinkages and synergies between these companies to keep Lavasa Corporation as a running township cannot be overemphasised and, therefore, to achieve a more value maximisation deal, it becomes imperative that any bidder bids for these inter-linked good companies by way of a single offering which would result in achievement of higher value,” the NCLT bench said.

Lavasa is the country’s first privately developed city spread over 20,000 acres, some 180 km from Mumbai. According to its website, it owes more than Rs 6,400 crore to its financial creditors and more than Rs 538 crore to about 1,000 homebuyers.

At the time of admitting it for the resolution process, Ajit Gulabchand-promoted Hindustan Construction Company held 68.7% stake in Lavasa. Other shareholders included Gautam Thapar’s Avantha Group with 17.18%, Venkateshwara Hatcheries with 7.81%, and Vithal Maniar with 6.29% stake.

The counsel for the lenders argued that most of the bidders have put consolidation of the three firms as a precondition in their resolution plan and therefore it would be harder to find a revival plan for any of these company on a standalone bases if the supply and demand from the rest of the companies are not guaranteed.

Lavasa Corporation has two other subsidiaries — Warasgaon Power Supply and Dasve Retail. They are not undergoing CIRP and, therefore, NCLT said the consolidated committee of creditors (CoC) of Lavasa Corporation, WAML and DCCL may make an informed decision regarding the resolution of debt of those two companies.

The tribunal gave 60 days to complete the consolidation.

An email query to the Shailesh Verma of Deloitte, the resolution professional of Lavasa Corporation, did not elicit any response as of press time Friday.

Senior counsels Pradeep Sancheti and Pulkit Sharma along with Prateek Mishra of law firm L&L Partners appeared for the lenders in the case.

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