NCLT approves Rs 362.5 crore resolution plan for RG Residency

The National Company Law Tribunal (NCLT) Principal Bench in New Delhi has approved a ₹362.5 crore resolution plan for RG Residency Pvt. Ltd, concluding a year-long pre-packaged insolvency process under the Insolvency and Bankruptcy Code (IBC), 2016. The plan, proposed by the corporate debtor (CD) and approved by a 98.89% majority of the Committee of Creditors (CoC), aims to revive the real estate firm by settling debts through project completions, unit sales, and strategic loans.

Key details of the resolution plan

The resolution plan, submitted by Resolution Professional (RP) Rajeev Lochan, outlines a structured payment schedule over 44 months:

• Operational Creditors: ₹217.48 crores, including ₹199.48 crores to the Noida Authority.
• Financial Creditors: ₹119.52 crores to Pridhvi Asset Reconstruction and Securitisation Company (PARAS), with additional surplus sharing.
• Other Creditors: ₹11.48 crores for refund-seeking homebuyers.
• Related Parties: ₹2.02 crores.

Funding will be sourced from the sale of unsold units in RG Residency’s residential projects and a ₹30 crore loan. The Noida Authority, a statutory body leasing land to the CD, issued a no-objection certificate after the CoC re-evaluated the plan in its presence.

Challenges and tribunal directives

The NCLT initially flagged concerns over ambiguities in the plan, including missing financial projections, undefined terms like “Group Company,” and compliance with tax laws. The tribunal also questioned how RG Residency, registered as a “Small Enterprise” under MSME norms, would maintain its status while repaying ₹445 crore debts.

In response, the RP clarified:

• Financial projections were submitted, showing revenues exceeding MSME thresholds in subsequent years. The tribunal accepted this, citing the CoC’s commercial wisdom.
• The Noida Authority’s no-objection was secured after the plan was remanded for reconsideration.
• Tax-related clauses under Section 79 of the Income Tax Act were omitted, as the plan does not alter shareholding.

Project timelines and monitoring

The CD must complete Phase 2 of its RG Mirage project within 38 months post-approval. A Monitoring Committee—chaired by the RP, with representatives from the CD and CoC—will oversee fund utilization and compliance. Failure to meet milestones allows creditors to take recovery actions.

Pending Litigations and Compliance

Five homebuyers had filed intervention applications seeking redressal. The NCLT directed that their claims, if admitted, be settled under the plan’s terms. The tribunal also emphasized that all statutory approvals, including those from tax authorities, must be obtained within a year, as mandated under IBC.

Impact and Next Steps

With the moratorium lifted, RG Residency’s management retains control but must adhere to the resolution plan’s conditions. The RP will hand over records to the resolution applicant, and the tribunal has urged relevant ministries to review MSME eligibility criteria for real estate firms to prevent misuse.

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