21 June 2019: Realty developer Rustomjee Group has emerged as the sole bidder for Ariisto Developers, one of the first Mumbai based builders to be admitted by the National Company Law Tribunal (NCLT) for undertaking insolvency proceedings, said persons with direct knowledge of the development.
“According to Rustomjee’s proposal, lenders will get over ₹250 crore upfront and have been offered up to 25% revenue share in the company’s only project spread over 32 acres in Mulund, a suburb of Mumbai,” said one of the persons mentioned above.
Total claims of lenders and other stakeholders, including lenders and operational creditors, stand at ₹2,500 crore. NCLT had admitted and initiated insolvency proceedings against the developer last November.
The company was earlier in talks with realty developers, including Lodha Developers and Shapoorji Pallonji Real Estate, to enter into a joint development agreement and monetise the underconstruction project with a total of over four million sq ft space. However, given the current liquidity concerns, the talks did not materialise.
Jayesh Sanghrajka, interim resolution professional (IRP) appointed by the NCLT to manage the company, declined to comment on the story stating that the matter is currently under insolvency proceedings.
ET’s email to Rustomjee Group remained unanswered till the time of going to press.
Currently, the proposal is being discussed among the Committee of Creditors (CoC) and the process is expected to take over 15 days. In the event of financial creditors rejecting Rustomjee’s bid, the resolution professional can invite fresh bids for the company.
“Lenders are expected to take a haircut as value of the asset is not much compared to the total claims of ₹2,350 crore. Also, the response to the insolvency proceedings has remained weak given the complexity of agreements the company has already entered into,” said another person mentioned above.
Out of total 32 acres, Arristo Developers has entered into a joint venture with a local landlord for the development, while certain vacant land has been acquired by the company independently.
As the land parcel also had a slums portion, the company is executing part of the project as rehabilitation work approved by the Slum Rehabilitation Authority (SRA).