Business conglomerate Adani group has won a bid to acquire Aditya Estates Pvt Ltd, which holds a posh 3.4 acre residential property near Mandi House in the heart of the national capital, through an insolvency process for a total deal value of Rs 400 crore.
The Delhi-based Principal bench of the National Company Law Tribunal (NCLT) has approved the resolution plan of Adani Properties to acquire Aditya Estates for Rs 265 crore. Another Rs 135 crore would go towards meeting the statutory charges, taking the total deal value to Rs 400 crore.
The Committee of Creditors (CoC) of Aditya Estates led by ICICI Bank PLC had already approved by 93.01 per cent vote share, Adani’s Rs 400 crore offer, which includes an upfront payment of Rs 265 crore.
According to the list of resolution applicants submitted on June 27, 2019 nine resolution applicants had shown their interests for the property, which include — Narayana Murthy, Malvinder Singh, Anil Rai Gupta, Paras Pramod Agarwal besides others as Dalmia Cement (Bharat), Veena Investments, Welspun Logistics, Adani Properties and Panch Tatva Promoters.
However, only two of them -- Adani Properties and Veena Investments -- had submitted their resolution plans.
Later, the COC rejected Rs 225 crore offer from Veena Investments as it found it to be non-compliant and conditional. Besides, it did not take into account any liability that may arise from NDMC for house tax, sales tax and Income Tax in future.
During the ﬁnal hearing while granting approval to the sale, Spirit Infrapower, a dissenting ﬁnancial creditor had raised objection before NCLT on the ground that the Adani group firm has reduced its offer from Rs 400 crore to Rs 265 crore, thereby the main object of the IBC Code to maximise the value of assets of the Corporate Debtor has been defeated.
It has also contended that the liquidation value of the property was Rs 306 crore and the resolution plan was much lower sum of Rs 265 crore.
However, the resolution professional and CoC submitted that the reduction/adjustment was done to meet the liabilities arising out of the transaction payable to NDMC for conversion of property to free hold, property tax, stamp duty and other related charges.
As per the request for resolution plan (RFRP) was to provide a resolution plan to acquire on an “as is where is” basis, resolution applicants were asked to de-link the risks and to remove contingency and uncertainty.
The rational for reduction of the financial proposal is as per the estimates. The cost of conversion and other associated payments were estimated at Rs 177 crore and can exceed beyond it, they submitted.
“Accordingly, the financial proposal was reduced from conditional Rs 400 crore to ﬁxed upfront payment of Rs 265 crore, which was accepted by CoC with overwhelming majority of 93.01 per cent votes," it said.
Over the valuation, RP and CoC said that Aditya Estates Private is a the leasehold immovable property and the property is held on a leasehold basis from the Land and Development Office, Ministry of Urban Housing Affairs (L&DO).
It further said that the liquidator had said that buyer would have to pay the conversion charges to L&DO and after considering this, the liquidation value of the property is reduced to half by Rs 153 crore.
Allowing the deal and rejecting dissenting financial creditor's submission, NCLT in its order passed on February 14 said: ”It is well settled proposition of law that commercial and business decisions of CoC are not open to judicial review. Adjudicating Authority (NCLT) cannot enquire into the commercial wisdom of CoC.”
NCLT has directed to appoint a “monitoring committee’ comprised of ﬁve members constituting RP and two representatives of Adani Power and approving ﬁnancial creditors.
Earlier, NCLT had on February 26, 2019 had admitted the plea filed by ICICI Bank UK PLC to initiate insolvency proceedings against Aditya Estates.
ICICI Bank UK PLC claimed to be a financial creditor of Aditya Estates on account of debt of USD 63 million granted to Assam Oil Company, an overseas company. It had contended that as per terms of debt asset swap agreement Aditya Estates defaulted to pay the debt.
Later, NCLT order to initiate insolvency was challenged by Aditya Kumar Jajodia, a shareholder of Aditya Estates, before National Company Law Appellate Tribunal (NCLAT), which also rejected in September 5, last year.