NEW DELHI: The Enforcement Directorate has said that real estate developer Experion Developers misused the provisions of the Insolvency and Bankruptcy Code in acquiring 9.3 hectares of land in Sector 62 of Gurugram.While investigating a Prevention of Money Laundering (PMLA) case against Religare Finvest, the ED had seized assets of the corporate debtor, Dignity Buildcon, which was later acquired by Experion.
The ED has now filed an application before the National Company Law Tribunal, urging the National Company Law Tribunal to quash the May 2023 order that allowed Dignity Buildcon to be acquired by Experion through the insolvency process.
It has also said that Experion Capital (ECPL), a group company of Experion Developers, besides acquiring 60% voting rights in the creditors’ committee (CoC) through the purchase of credit facilities, also exerted undue influence over the voting rights of CoC member Alchemist ARC, which held 35% of the total voting share. “ECPL spent Rs 223.92 crore to acquire 60% of voting rights and influence a member of the CoC who had 35% of voting rights and received Rs 334.08 crore from EDPL after the resolution plan was approved. This is a blatant misuse of Section 30(5) of the IBC, 2016,” the ED has said. It has further alleged that the successful resolution applicant (SRA) deliberately held up the company. insolvency resolution process (CIRP) until the composition of the CoC and the corresponding voting rights were changed in its favor.Experion has labeled the claims of incorrect CoC reconstruction as unfounded.
“The debt transfers to ECPL were paid in full, any amendment was submitted to the NCLT and the updated CoC was publicly displayed on the IBBI website. The law expressly allows a creditor to be a resolution applicant,” an Experion spokesperson said.
“Separately, the Enforcement Directorate itself has stated before the Delhi High Court that it intended to attach properties of RS Infrastructure – and not DBPL – and the subsequent attachment of DBPL assets appears to be an unlawful attempt to delay its revival. The Supreme Court has granted interim protection over the seized assets,” the spokesperson said.
The ED said the investigation revealed that financial creditors who suffered losses due to Dignity Buildcon’s default transferred the debts to ECPL, allowing a haircut of 70.17%. Therefore, ECPL reaped the benefit of the 70.17% haircut while gaining direct control of 60% of the voting rights and indirect control of 35% of the voting rights of the CoC.
“The SRA exerted undue influence over a member of the CoC and coerced him into voting in support of the resolution plan submitted by the SRA. The CoC, which was substantially influenced by the SRA and its related entities – which had become members of the CoC – was maneuvered into approving a resolution plan that was financially inferior and not commercially justified, thereby harming the interests of other potential resolution applicants (PRAs) and compromising the fairness and transparency of the resolution process undermined,” the ED has said. said.
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