NCLT admits Ansal Properties & Infrastructure to insolvency

The National Company Law Tribunal (NCLT), New Delhi, on February 25, admitted Ansal Properties and Infrastructure Limited (APIL) to the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016, on a petition filed by IL&FS Financial Services Limited (IL&FS) over a default of ₹257 crores..A Bench comprising Judicial Member M Sankariah Shanmuga Sundaram and Technical Member Dr. Sanjeev Ranjan said,“The Application bearing IB-558(ND)/2024 filed by the Applicant/(FC), under section 7 of the Code read with Rule 4 of the Adjudicating Authority Rules for initiating CIRP against the Corporate Debtor is admitted.”.IL&FS, the financial creditor, contended that it had extended two term loan facilities totalling ₹150 crores to APIL in 2016. Despite multiple settlement agreements and revised payment plans, APIL failed to repay the outstanding dues, which amounted to ₹257.43 crores, including interest and charges. IL&FS classified APIL’s account as a Non-Performing Asset (NPA) in September 2018 and subsequently filed the insolvency petition in July 2019. The petition was initially withdrawn in April 2021 to explore settlement options, but APIL’s repeated defaults led to the revival of the petition.IL&FS argued that APIL had consistently defaulted on its repayment obligations, despite multiple opportunities to settle the debt. The financial creditor highlighted that APIL had only paid ₹28.36 crores out of the revised settlement amount of ₹111.36 crores, leaving a significant balance unpaid. IL&FS also pointed out that APIL’s reasons for delay, such as market conditions and regulatory changes, were insufficient to justify the defaults..APIL countered that the company was solvent and operational, with a customer base of over 10,000 individuals. The real estate developer argued that the default was due to temporary liquidity issues caused by external factors, including delays in project approvals during the General Elections. APIL sought additional time to repay the outstanding amount, claiming that initiating CIRP would disrupt its ongoing projects and harm stakeholders, including homebuyers..The NCLT observed that the existence of a financial debt and default by APIL was undisputed. The tribunal emphasised that the IBC is designed to address insolvency and financial distress, and temporary liquidity issues do not justify delaying insolvency proceedings. The Bench noted that APIL had repeatedly failed to adhere to settlement terms and had not provided a satisfactory explanation for its non-payment..The tribunal also dismissed intervention applications filed by Droom2r Developers Private Limited and other stakeholders, including homebuyers and investors, who sought to exclude certain projects from the CIRP or propose alternative settlement plans. The NCLT clarified that the IBC framework already provides adequate safeguards for stakeholders, and their claims could be addressed during the CIRP process..The NCLT admitted the insolvency petition and declared a moratorium under Section 14 of the IBC, prohibiting any legal actions against APIL, including the transfer of assets or enforcement of security interests. The tribunal appointed Navneet Kumar Gupta as the Interim Resolution Professional (IRP) and directed him to make a public announcement regarding the initiation of CIRP within three days..The next steps in the process will involve the formation of a Committee of Creditors (CoC) and the submission of a resolution plan to revive APIL as a going concern..IL&FS was represented by Senior Advocate Gopal Jain along with a team from DSK Legal comprising Advocates Niraj Kumar (Partner) Satendra Kumar Rai (Associate Partner) Ruchika Darira (Principal Associate) and Pareesh Virmani (Associate)..Ansal Properties was represented by Advocates Neeha Nagpal, Malak Bhat and Nikunj Mahajan. .[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.