NCLT declare Wadhwa Buildcon promoters plan invalid

26 Mar 2024 CW Team

The National Company Law Tribunal (NCLT) has announced that the resolution plan put forward by the promoter of Wadhwa Buildcon is deemed invalid. This decision, influenced by the actions of the resolution professional (RP), was reached due to the promoter's prior classification as a wilful defaulter.

Bank of India, the company's financial creditor, raised concerns about various irregularities in the approval procedure of the resolution plan. These concerns, supported by the bankruptcy court's Mumbai bench, resulted in the rejection of the plan. Notably, the voting dynamics within the Committee of Creditors (CoC) shifted significantly, with financial creditors' voting percentage declining to 31.08% while homebuyers' share rose to 66.42%.

According to the NCLT bench led by judicial member Reeta Kohli and technical member Madhu Sinha, the prominent role assumed by homebuyers in the decision-making process was due to their vulnerable position and primary interest in securing their respective flats.

The resolution professional's conduct, such as delays in presenting the plan and incorporating homebuyers into the committee, was perceived as detrimental to the creditor's interests. Moreover, it was revealed that the company's promoter, Ankit Wadhwa, had been previously declared a wilful defaulter, a fact not disclosed by the resolution professional to the CoC.

The court considered this omission as a failure of duty on the part of the resolution professional, depriving the CoC of essential information for informed decision-making. The significance of Section 29A of the Insolvency and Bankruptcy Code (IBC), aimed at barring defaulting promoters from the resolution process, was emphasized. Consequently, the court ruled out the acceptance or approval of any resolution plan from a wilful defaulter, aligning with the IBC's objectives.

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