Adani Bid for Radius Estates Gets Majority Creditors Nod

Adani’s bid for Mumbai realty company Radius Estates has been approved by 80% of creditors surpassing the requisite two thirds majority required under Insolvency and Bankruptcy Code (IBC) guidelines for approval of a bid. .The Adani bid has become controversial after debenture holders of Radius Estates, ICICI Prudential Venture Capital Fund Real Estate Scheme 1 and Beacon Trusteeship approached national company law tribunal (NCLT) on Thursday opposing its bid on the grounds that it forces creditors to take a 90% ‘haircut’. Radius Estates owes creditors including banks and financial institutions and home buyers Rs 3000 crore in unpaid dues. The banks and financial institutions and the home buyers are in favour of Adani’s bid as is demonstrated by the voting results. They also approved a resolution to provide interim finance worth Rs. 500 crore to complete payment of statutory dues to government authorities and resume construction of the project. Adani’s plan requires financial creditors such as Housing Development Finance Corporation (HDFC) , Yes Bank, Dewan Housing Finance Corporation Limited (DHFL) and the debenture holders to write off 90% of their dues of about Rs. 1700 crore. HDFC alone has loaned around Rs. 1000 crore to the company. However, Adani has offered to complete a luxury residential project called Ten BKC that Radius Estates is constructing at no further cost to the home buyers. Ten BKC has over 400 residential units under construction. The haircut is not acceptable to the debenture holders who have argued that they represent the interest of small savers and pensioners who subscribed to schemes which invested in debentures of the company. ICICI Prudential’s scheme has 1810 investors and Beacon Trusteeship represents 330 investors. Their collective outstanding dues are around Rs. 200 crore. The debenture holders may approach national company law appellate tribunal (NCLAT) to oppose the voting results on the grounds that the home buyers are wealthy individuals who have purchased homes worth Rs. 5 crore or more and should shoulder more of the financial burden.