Lavasa Corporation Gets 90-Day Extension for Revival Amid Bankruptcy Proceedings

The planned city project of Lavasa Corporation has been granted a 90-day extension in its Corporate Insolvency Resolution Process (CIRP) by a bankruptcy court in Mumbai. This decision comes after the National Company Law Tribunal (NCLT) directed the revival process to restart, following the failure of the previously approved resolution plan by the successful bidder within the stipulated timeline.

Lavasa Corporation, India's first privately developed city, was launched by the Ajit Gulabchand-led Hindustan Construction Company (HCC) in 2000. Spanning over 20,000 acres in the Mulshi and Velhe regions of Maharashtra's Pune district, the project was envisioned as a world-class smart city. However, over the years, it faced multiple roadblocks, including environmental violations, legal disputes over land acquisition, and financial distress, which ultimately led to insolvency.

The Bankruptcy Proceedings and Financial Liabilities

The company has accumulated liabilities exceeding ₹6,642 crore. The initial resolution plan involved Darwin Platform Infrastructure, which had proposed to settle debts with a payment of ₹1,514 crore. However, the bidder failed to implement the approved resolution plan within the set timeframe, leading to the NCLT’s decision to restart the process.

The resolution professional (RP) overseeing Lavasa Corporation's insolvency informed the tribunal that significant progress has been made in restarting the resolution process. Key steps such as the release of the Request for Resolution Plan (RFRP), Information Memorandum (IM), and Evaluation Matrix (EM) have already taken place, and discussions with potential bidders are underway.

Tribunal’s Decision and Legal Implications

The tribunal’s recent order stems from an application filed by Union Bank of India, a secured creditor representing the interests of Lavasa’s lenders. The plea argued that since Darwin Platform Infrastructure failed to execute its obligations under the resolution plan, a fresh round of bidding was necessary. Consequently, the division bench, comprising judicial member KR Saji Kumar and technical member Anil Raj Chellan, approved the RP’s request for a 90-day extension, extending the process from February 28, 2025, to May 29, 2025.

Legal experts, including Ashish Pyasi, Partner at Aendri Legal, noted that typically, insolvency resolution must be completed within 180 days, with a maximum extension of 90 days, totaling 330 days. However, in exceptional cases where substantial progress has been made, further extensions may be considered.

Background and Stakeholders Involved

When Lavasa Corporation entered insolvency proceedings, HCC held a 68.7% stake in the company. Other key stakeholders included Avantha Group with 17%, Venkateshwara Hatcheries with 7.5%, and Vithal Maniar with 6.3%. The project, once envisioned as a thriving smart city, was marred by regulatory challenges and financial mismanagement, leading to its eventual downfall.

Despite past hurdles, the fresh CIRP extension provides hope for Lavasa’s revival. If a new resolution plan is successfully implemented, it could pave the way for the city's completion, benefiting creditors, stakeholders, and potential investors. However, if the extended timeline does not yield tangible results, liquidation remains a looming possibility.