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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2020 (2) TMI Tri This

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2020 (2) TMI 1405 - Tri - Insolvency and Bankruptcy


Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) by homebuyers.
2. Failure of the Corporate Debtor to complete the project and deliver apartments.
3. Financial status and solvency of the Corporate Debtor.
4. Non-compliance with statutory obligations and RERA orders.
5. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) by Homebuyers:
The petition was filed by M/s. Skylark Ithaca Buyers Welfare Association, consisting of 255 homebuyers, under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate CIRP against M/s. Skylark Mansions Private Limited for defaulting on an amount of ?220,90,27,614/- including principal and interest. The homebuyers had entered into agreements for the purchase of apartments, but the Corporate Debtor failed to complete the project and deliver the apartments.

2. Failure of the Corporate Debtor to Complete the Project and Deliver Apartments:
The Corporate Debtor, in association with its subsidiary ITHACA Estates Private Limited, failed to complete the construction of the apartments as per the agreed timelines. Despite receiving substantial payments from the homebuyers, the construction was not commensurate with the payments made. The Corporate Debtor and IEPL had promised to complete the project by various dates, but the work remained incomplete, leading to financial distress for the homebuyers who continued to service their home loans.

3. Financial Status and Solvency of the Corporate Debtor:
The financial statements of the Corporate Debtor indicated increasing borrowings and losses, with long-term borrowings rising from ?386.54 crore to ?475.22 crore and cash flow decreasing from ?15.12 crore to ?4.48 crore. The company showed an unhealthy financial status, indicating its inability to pay its debts. Despite claims of ongoing projects and financial solvency by the Corporate Debtor, the evidence suggested otherwise.

4. Non-compliance with Statutory Obligations and RERA Orders:
Several homebuyers had approached the Real Estate Regulatory Authority (RERA) and obtained orders directing the Corporate Debtor to pay compensation for delays. However, the Corporate Debtor failed to comply with these orders. The homebuyers issued a demand notice, but the Corporate Debtor's response was vague and did not address the core issues. The Corporate Debtor's balance sheets also indicated non-compliance with statutory requirements and default in loan repayments.

5. Appointment of Interim Resolution Professional (IRP) and Declaration of Moratorium:
The Tribunal appointed Mrs. Ramanathan Bhuvaneshwari as the Interim Resolution Professional (IRP) and declared a moratorium prohibiting suits, transferring of assets, and recovery actions against the Corporate Debtor. The IRP was directed to carry out functions as per the IBC, 2016, and submit progress reports to the Tribunal. The moratorium would remain in effect until the completion of the CIRP.

Conclusion:
The Tribunal admitted the petition filed by the homebuyers, initiating CIRP against M/s. Skylark Mansions Private Limited. The Corporate Debtor's financial distress, failure to complete the project, non-compliance with statutory obligations, and inability to pay debts were key factors in the decision. The appointment of an IRP and declaration of moratorium aimed to resolve the insolvency issues and protect the interests of the homebuyers.

 

 

 

 

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