Lenders terminate bankruptcy proceedings against Lavasa Corporation

Lenders who have run up Rs 7,700 cr bad loans will call for fresh bids

The lenders of Lavasa Corporation, a hillside township near Pune, have terminated bankruptcy proceedings against the company as they did not receive good bids. The lenders, saddled with Rs 7,700 crore of bad debt in the company, will invite fresh bids.

According to a banking source, the National Company Law Tribunal (NCLT) has ordered consolidation of bankruptcy proceedings against all subsidiaries along with Lavasa Corporation and, hence, fresh bids will be called. Lavasa, a subsidiary of HCC, was sent for bankruptcy proceedings in 2018 and has already missed deadlines prescribed in the Insolvency and Bankruptcy Code (IBC), 2016.

Axis Bank has made the highest claim of Rs 1,266 crore against the company. The other lenders are State Bank of India.

Set up in 2000, Lavasa was developed as a picturesque hill station near Pune, Maharashtra. It defaulted on bank loans after the Union environment ministry issued a stop-work order on the project in 2010.

The outbreak of the Covid-19 pandemic has worsened the situation, as a few hotels have shut their doors, and even the weekend traffic into the township has dropped to zero — turning it into a ghost town. It also forced bidders to make very low offers, with one even offering just Rs 5 crore as upfront money last November.

One of the options before the lenders is to send the company to liquidation, which means they will have to go home with a miniscule part of their dues.