MUMBAI: The Supreme Court has approved the nominations of seven directors on the board of beleaguered realty developer Unitech that would now be run by the government. These directors include real estate and financing sector stalwarts such as HDFC’s Renu Sud Karnad, Hiranandani Group’s Niranjan Hiranandani, Jitu Virwani of Embassy Group, state-run NBCC’s former Chairman & Managing Director Anoop Kumar Mittal.
Renu Sud Karnad, however, told ET that she is not aware of the development.
Yudvir Singh Malik, retired IAS officer from Haryana cadre, will be the Chairman & Managing Director of the newly-formed board of Unitech. He has retired as Secretary, Ministry of Road Transport & Highways and also worked as Chairman of the National Highway Authority of India.
Girish Kumar Ahuja, central government nominee director, State Bank of India and B. Sriram, former Managing Director & CEO of IDBI Bank are two other directors approved by the court. Sriram is former Managing Director of SBI and is currently a part time member of the Insolvency and Bankruptcy Board of India (IBBI).
Names of these directors were proposed by the government to the apex court. Following the court’s approval, the government will now appoint them on the board. The newly appointed board has been given two months to chalk out and submit a resolution plan for Unitech to the apex court. All the ongoing court cases against Unitech have been stayed for the next 60 days.
“It’s a challenge, but we should be able to do it as thousands of homebuyers and several stakeholders are awaiting a resolution. While the board has been given two months to submit resolution plan, we should be able to do it in 30 days,” Niranjan Hiranandani told ET while confirming the development. “We should be able to hit the ground in 60 days.”
According to him, the board should not seek an extension from the court to submit the resolution plan. Once the board is able to show viability of the plan, Unitech’s projects can access the government’s already announced RS 25,000-crore fund for last mile financing of stuck housing projects.
With regard to the larger public interest involved, the government had previously approached the National Company Law Tribunal (NCL T) in December 2017 to remove the existing management of Unitech. As part of its proposal, the government will not infuse any funds for the completion of pending projects of Unitech and appoint a retired judge of the Supreme Court for supervision of the resolution framework finalized by the proposed board of directors.
The court may permit the proposed board of directors to raise funds due from the home buyers, and to sell the unsold inventory of stock and the unclaimed inventory available for re-selling. Further, the proposed board will be allowed to monetize the unencumbered assets of the company for completion of housing units. In addition, the court may release, to the proposed board of directors, funds lying with the court pertaining to the company or its management.
Unitech is the third company in recent times to be taken over by the government after software exporter Satyam Computer Services over a decade ago and recent instance of Non-Banking Finance Company IL&FS.
According to findings of forensic audit report submitted to the court, Unitech had witnessed siphoning off of funds that were received from the home buyers for purposes unrelated to the 74 projects. The funds were diverted to off-shore tax havens and the management had entered into transactions with undisclosed and disclosed related entities. The report had also highlighted diversion of funds to related companies.
Source- Economic Times.