Dismissing the objections of the Enforcement Directorate (ED) and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the National Company Law Tribunal (NCLT) has approved the resolution plan of the consortium led by the promoters of Vamsiram Builders for Indu Projects Ltd.
A developer of townships and industrial parks, Hyderabad-based Indu Projects had defaulted on payments to lenders owing to the ED attaching its assets in connection with a probe into the alleged disproportionate wealth of Andhra Pradesh Chief Minister Jagan Mohan Reddy.
The ED had attached the assets of several companies alleged to have obtained favours from former Andhra CM YSR Reddy, father of Jagan Reddy, and invested in the businesses of the latter in a quid-pro-quo.
The NCLT bench at Hyderabad comprising judicial member Telaprolu Rajani and technical member Charan Singh approved the Rs 501 crore resolution plan of the consortium led by Vamsiram Builders’ promoter B Subba Reddy and C Venkateswara Reddy, and dismissed the objections filed by the ED and APIIC through intervention petitions airing apprehensions over the disposal of assets of the bankrupt firm.
The NCLT had earlier approved a resolution plan worth Rs 600 crore submitted by Earthin Projects, making it one of the biggest resolution plans of 2019-2020. But Earthin failed to pump in the promised funds, leading to wilful violation of the resolution plan, forcing the tribunal to order criminal proceedings.
The lenders of Indu Projects, who had moved the tribunal in early 2019 seeking to initiate a corporate insolvency resolution process (CIRP), had claimed Rs 4,531 crore of dues, of which Rs 4,139 crore was admitted. The lenders include SBI, IDBI Bank, Edelweiss ARC, Bank of India, Indian Overseas Bank, Syndicate Bank, Punjab National Bank, Canara Bank, UCO Bank, Central Bank of India, Andhra Bank, and Srei Infrastructure Finance.
Though Indu Projects, promoted by I Syam Prasad Reddy, was admitted to the CIRP in February 2019, the tribunal had extended the CIRP period multiple times owing to several factors including legal disputes, Covid lockdown, absence of an attractive offer from resolution applicants, and lack of consensus among lenders, among others.
After the Earthin Projects fiasco, the tribunal ordered a fresh CIRP, wherein eight expressions of interest (EoI) were received.
The plan submitted by Subba and Venkateswara Reddy was approved by the Committee of Creditors (CoC). The funds are to be delivered within 90 days of approval, from which Rs 394 crore would go to the financial creditors.
While dismissing the intervention petitions of the ED and APIIC on the sale of assets, the tribunal has noted the assurance of the resolution professional that there is no proposal to sell the assets attached by the ED, and the lands whose allotments have been cancelled by APIIC.
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