Adani Properties has received the National Company Law Tribunal’s (NCLT) go-ahead to acquire two significant assets belonging to the bankrupt real estate developer, Housing Development and Infrastructure (HDIL). This acquisition is proceeding through the corporate insolvency resolution process (CIRP). Adani Properties was the sole entity to present a proposal for both properties that adhered to the Insolvency and Bankruptcy Code (IBC) regulations.
The assets slated for acquisition are:
- ‘Inspire BKC’: A commercial property located in Mumbai’s prime business hub, Bandra-Kurla Complex (BKC).
- Kalyan Shahad Land Parcel: A plot of land situated on the outskirts of Mumbai, in Kalyan Shahad.
Estimates from industry specialists peg the combined worth of these two properties at over Rs 2,000 crore.
Breakdown of the Resolution Plans:
- Inspire BKC (Designated as Vertical V): The resolution plan for this commercial venture is valued at Rs 3 crore. This includes Rs 2.85 crore earmarked for creditors and Rs 15 lakh for CIRP-related expenses. Adani’s strategy for Vertical V involves either absorbing the BKC project directly or through a subsidiary, rather than taking over HDIL as a going concern. Adani has also committed to upholding the existing Slum Rehabilitation Authority (SRA) development agreement with Budhpur Buildcon. Budhpur Buildcon, acting on Adani’s behalf, now holds the Letter of Intent for the slum rehabilitation initiative in BKC, originally initiated by HDIL, and is tasked with its completion under SRA supervision.
- Kalyan Shahad Land Parcel (Designated as Vertical IX): The independent valuations for this land parcel placed its fair value at Rs 89.66 crore and its liquidation value at Rs 62.76 crore. For Vertical IX, Unity Small Finance Bank, formerly Punjab and Maharashtra Cooperative Bank, is the exclusive secured creditor with mortgage rights. The tribunal dismissed the bank’s objections regarding the valuation in July 2024.
Both acquisition proposals incorporate performance guarantees of Rs 5 crore each, a requirement under CIRP regulations.
Context of HDIL’s Insolvency and Resolution:
HDIL, promoted by Rakesh Wadhawan, has been undergoing insolvency proceedings since 2019, with acknowledged liabilities exceeding Rs 7,789 crore.
Initially, HDIL’s resolution professional sought expressions of interest for a comprehensive resolution of the company in February 2020, but no viable proposals emerged. Subsequently, the National Company Law Appellate Tribunal (NCLAT) permitted a project-specific resolution plan, given the numerous unfinished residential properties under HDIL’s purview.
While the Committee of Creditors (CoC) initially rejected this project-wise approach, they reversed their decision in September 2021, spurred by objections from homebuyers, and authorized the Resolution Professional (RP) to pursue project-specific resolutions. To streamline the process, HDIL was segmented into 10 verticals. The current approvals granted to Adani Properties pertain to Vertical V and Vertical IX.
The NCLT’s Mumbai bench endorsed the resolution plans for both projects under Section 31 of the IBC, 2016. The CoC had previously approved both plans with a 66.08% voting share in 2022, with the voting process concluding in November 2022.
