Shree Naman Developers buys out insolvent Neptune Developers for Rs 391 crore
The National Company Law Tribunal (NCLT), Mumbai Bench, has approved the Rs 391 crore resolution plan for Neptune Developers Limited, bringing hope to over 3500 homebuyers and other stakeholders. The plan, submitted by Shree Naman Developers Private Limited (SRA), was approved by the Committee of Creditors (CoC) with an 85.35% majority vote and received the tribunal’s nod today.
Neptune Developers entered insolvency in July 2021 after Central Bank of India filed a petition under Section 7 of the IBC. The CIRP saw multiple delays due to litigation, including appeals up to the Supreme Court.
Key Highlights of the Resolution Plan
- Financial Outlay: The resolution plan is valued at approximately Rs. 390.65 crores, significantly higher than the liquidation value of Rs. 313.31 crores. This ensures better recovery for creditors and completion of stalled projects.
- Homebuyers’ Relief:
- Homebuyers in the Ramrajya and Swarajya projects will receive their units, with adjustments for area variations limited to ±15%.
- The SRA has agreed to reduce the escalation cost from Rs. 1,500 to Rs. 1,200 per sq. ft. after tribunal intervention, easing the financial burden on homebuyers.
- Buyers opting to exit will receive refunds of principal amounts (excluding taxes) within 24 months.
- Creditors’ Payout:
- Secured Financial Creditors: Will receive 23.32% of their admitted claims, including upfront payments and Non-Convertible Debentures (NCDs).
- Dissenting Creditors: Central Bank of India and Tomorrow Capital Enterprises will receive liquidation value payouts.
- Operational Creditors: Government dues and employee claims will be settled in full, while other operational creditors will receive partial payments.
- Project Completion: The SRA commits to delivering completed units within 5 years for Ramrajya and 1 year for Swarajya, subject to buyer compliance with revised payment terms.
Tribunal’s Observations
The NCLT emphasized the commercial wisdom of the CoC, citing Supreme Court precedents like K Sashidhar v. Indian Overseas Bank and Essar Steel case, which limit judicial interference in CoC-approved plans. The bench, comprising Members Hariharan Neelakanta Iyer (Technical) and Lakshmi Gurung (Judicial), noted the plan’s compliance with the Insolvency and Bankruptcy Code (IBC) and its feasibility.
Challenges Addressed
- Valuation Dispute: Central Bank of India’s challenge to the valuation of Project Swarajya was resolved by setting aside Rs. 26.83 crores for its claims.
- Homebuyer Protections: The tribunal directed the SRA to ensure equitable treatment of homebuyers under RERA guidelines.
Next Steps
- The Steering Committee, including representatives from creditors and the SRA, will monitor implementation.
- The moratorium under Section 14 of the IBC stands lifted, allowing the SRA to take over operations.
Stakeholder Reactions
- Homebuyers: Welcomed the decision, as the plan offers a clear path to possession or refunds.
- Creditors: Secured lenders, particularly ACRE and Edelweiss ARC, expressed satisfaction with the NCD-based repayment structure.
Also See: ATS Infrabuild to undergo insolvency process for Rs 5-crore default
