– Realty major Supertech goes bankrupt
– Declares Company Law Tribunal
– Debate raging on the likely impact
The National Company Law Tribunal has declared that the realty major Supertech has gone bankrupt. It owed Rs 431 crore to a consortium of banks. As it failed to clear the amount, the Company Law Board took the decision to declare the realtor bankrupt. What is going to be the impact of the decision on the realty sector? What would be the fate of customers of Supertech’s other projects? A discussion is doing rounds in the realty sector. In Delhi alone, 11,000 buyers would be affected by the bankruptcy decision.
What happened?
The Supertech availed a loan of Rs 350 crore from Union Bank of India-led consortium of banks in 2013 to build the Eco Village-2 project launched by it in Greater Noida. Later, it failed to make prompt repayments. By July 2019, it defaulted payment of the loan. In this backdrop, the Union Bank has approached the National Company Law Tribunal to recover dues to the tune of Rs 431.92 crore from the Supertech. It may be recalled that the Supreme Court has ordered demolition of two towers of the Supertech built in Noida. Currently, works related to demolition are under way.
The company was ordered to return money invested in twin towers by 633 customers with 12 percent interest. So far, 248 customers have received the refund. Another 133 customers bought flats in other projects of Supertech. The Supreme Court also directed Supertech to pay Rs 2 crore to the Emerald Court Project’s Welfare Association since the twin towers have blocked ventilation to the Emerald court.
As the Supertech has failed to repay the loan, the Company Law Tribunal has declared that the Supertech has gone bankrupt. As a result, the realtors’ other projects like Eco Village-1, 2 and three, Noida Extension, Emerald Court project are going to be affected by the decision.
What will be the future?
Once a company is declared bankrupt, the rule of the company as a promoter ends once for all. Till the bankruptcy proceedings are through, a moratorium will be enforced on the company. It will be applicable to all civil, consumer and RERA cases.
What is in store for buyers?
The condition of buyers of projects in a bankrupt company would turn for the worse, there is no doubt about it. They would have to wait till the bankruptcy proceedings are through. In fact, such proceedings will continue for several years altogether. However, the Supreme Court gave some relief to the Supertech victims. It asked the customers to be included among the creditors’ body.
What should the buyers do?
The flat buyers in the bankrupt company should submit their claim to those who initiate the bankruptcy proceedings. If their claims get approval, they will get the status of creditor to the company. They will have the right to vote in the decisions taken to move the bankruptcy proceedings. The buyers should try to get the latest updates about the bankruptcy proceedings. The flat buyers should conduct themselves with a team spirit. At the same time, they should not stop making EMI through banks. If they stop making EMI payments on the grounds of bankruptcy of the builder, it would lead to more problems.
What is the contention of Supertech?
The Supertech seeks to make an appeal to the Company Law Appellate Tribunal challenging the bankruptcy decision of the Company Law Board Tribunal. The tribunal directions are not going to affect the other projects of the Supertech under construction. The process to handover flats to buyers will continue. During the past seven years, over 40,000 flats have been given possession. It would improve further. Another 7000 units would be handed over to customers by December this year under its Mission Completion-2022 programme, the company said.
