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NCLT initiates insolvency proceedings against realty firm MGF Developments

Economic Times  

The National Company Law Appellate Tribunal (NCLAT) has initiated insolvency proceedings against NCR-based real estate firm MGF Developments Ltd, on a petition filed by a group of homebuyers. An Interim Resolution Professional has been appointed. The application was filed by the Vilas Condominium Association consisting of homebuyers having 327 units allotted in the name of members of the association. The default amounts are under various heads and include INR 11.48 crore of Interest-Bearing Maintenance Security (IBMS) collected from the home buyers and not refunded to the association of homebuyers as per law. MGF had formed a joint venture with Emaar Properties, which entered India in 2005 with the largest FDI in the realty sector under Emaar MGF Land. In April 2016, Emaar decided to end the MGF joint venture and two months later, Shravan Gupta, the then executive vice chairman and managing director of the joint venture, resigned. The demerger was finally approved in July 2018. Currently, the erstwhile partners are at loggerheads after the Dubai-based realty developer accused fraud in joint venture agreements and land deals and filed a petition with NCLT in November 2019 seeking investigation into this. It has sought compensation of INR 2,400-crore bank guarantee to secure its losses.