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Technically sold and alloted land can also be seized by banks if they have a lien on it that was created before it was sold and alloted, though it will be a messy legal fight and they will only do this as a last resort.CommentQuote0Flag
- Of course WT is saleable asset. But there are many obstacles if it comes down to that.
First of all, all parties must come to an agreement for sale to go ahead (parties include JP management, JP's Partners, JP's creditor banks, End consumer/Owners of WT Projects (Apartments and plot owners), Noida Authority etc etc etc
Secondly, price determination of assets will be a challenge In context that WT is not fully developed and present market conditions. Liabilities and interests of multiple parties are interlocked in WT.
Its in Banks best interest to NOT interfere with WT. Better force JP to collaborate or sell stake to another developer who is in good financial condition and who can help JP finish the completion of WT and utilize unused land.CommentQuote0Flag
- Originally Posted by jollygood@pkgandhi This double financing is pretty normal. The banks money is secured as they have a lien on the money coming in from the buyers. But many builders diverted the money from land purchases, so the banks have created project specific escrow accounts. If done in the right way it is a good idea as it provides leverage to the builder and the bank is assured of the money coming in from the apartment sales. The bank only needs to ensure that the full loan is paid off by the time the apt is ready for delivery.
This has clearly not been done in the right way and if I were in charge I would have the practice discontinued. Some leverage is good, but this is unhealthy.CommentQuote0Flag
- Originally Posted by dineshsaysNirman Sadan has NOT been taken over - misquote after misquote. It is an old story that it was going on the block a long time back.
Haha - if they effectively want to service/repay the bank loans and bank are prodding/pushing them on - it is a bankrupt company.
Wow - genius? If I take a loan and am unable to service it for a few months because of a cash flow situation - I am bankrupt. Aap mahaan ho dost.
Unitech is not selling UGCC land, banks have declared them NPAs even so.. So they are now effectively bankrupt right??
What an amazing anology.
Like I said, bankruptcy laws in India are messy, but yes Unitech is effectively insolvent ( though not technically bankrupt, since they have not filed for bankruptcy yet).CommentQuote0Flag
- Originally Posted by pkgandhiLike I said, bankruptcy laws in India are messy, but yes Unitech is effectively insolvent ( though not technically bankrupt, since they have not filed for bankruptcy yet).
So if they now sell UGCC land and some other land they have, repay their loans - they become solvent again?CommentQuote0Flag
- Originally Posted by pkgandhiTechnically sold and alloted land can also be seized by banks if they have a lien on it that was created before it was sold and alloted, though it will be a messy legal fight and they will only do this as a last resort.
That's too far fetched.
Even considering it in a hypothetical scenario. Such seizure of sold and allotted private property can only be done by obtaining some consensus with State (UP Govt, Noida authority). And State Govt will never allow that to happen.CommentQuote0Flag
- Not really, a builder buys land, pledges it to bank to get working capital loan that will be serviced by receivables. Both the land and receivables are in control of the bank. Since the land is on lien it cannot be pledged elsewhere, there is no risk unless the banks collude with the builder and sanction more money by re-evaluating the land price and allowing him to divert money. This is not a problem with the practice but loose regulationsCommentQuote0Flag
Even considering it in a hypothetical scenario. Such seizure of sold and allotted private property can only be done by obtaining some consensus with State (UP Govt, Noida authority). And State Govt will never allow that to happen.
This is neither far fetched nor hypothetical. This is how JP and other builders have financed land and then sold off projects without clearing liens.
This is a subject matter of property law between private parties. I know you are a big government guy, but the state has absolutely no role to play here.CommentQuote0Flag
- Originally Posted by dineshsaysSo if they now sell UGCC land and some other land they have, repay their loans - they become solvent again?
Well it is difficult to have a technical conversation with someone who doesn't understand the definition of technical terms he uses ( hint GM and many donald trump companies went bankrupt), but in my opinion, Unitech does not own enough unencumbered UGCC land to sell and pay off their debts ( this is my opinion, not a fact), buy yeah if they could pay off all their debts by just selling assets, they will be solvent again.CommentQuote0Flag
- You, yourself said that Banks should not have allowed Builder to sell completed apartments to buyers without first clearing the loans which builder took to complete the project.
Now when Apartments are sold and registered with State Authority in favor of Buyer. You want Authority to change title of private property just because Bank came to senses about seizing the assets of Builder. It won't happen.CommentQuote1Flag
Now when Apartments are sold and registered with State Authority in favor of Buyer. You want Authority to change title of private property just because Bank came to senses about seizing the assets of Builder. It won't happen.
When I said it should not have been allowed, it was because I meant it was bad risk management, not because it was illegal. I don't want any of this to happen, I am just describing the legal implications and process. I said it was unlikely to happen, but the lenders definitely have that right , which might need to be proven in a court.CommentQuote0Flag
- Reading earlier Credit Suisse mentioned thay had gone through 7000 transactions/documents to establish companies debt, including Jaypee of 75k Cr - which by now would have reduced substancially on asset sales which were recognised - you claim to be an expert - who says Credit Suisse somehow made a mistake of the tune of 55 thousand crores or thereabouts.
The amount of research you must have done boggles the mind.CommentQuote0Flag
- but the lenders definitely have that right , which might need to be proven in a court.
And State Govt will have the say in it. Because as per state authority, the buyer is the registered owner of the property not some Bank which lent money to builder for project.
When property gets to stage of registration with State authority. The Title owner is the sole owner of property. Who lent money to what builder project on which terms, everything is irrelevant at this stage.
There is no way by which Banks will ever be able to seize Private property which builders have already sold. If banks foolish are enough. They can try in courts and years of litigation. But nothing will come out of it. Best time for Banks to act was when Builder was allotting properties to buyers without clearing dues to creditor banks. Banks didn't say anything that time. Now they can't do anything.CommentQuote3Flag
- Cabinet approves MMDR amendment; M&A to become easier
The Cabinet today gave green signal to transfer of mining lease for captive mines, easing up passage for merger and acquisition (M&A) activities in the cement sector.
The Mines and Minerals (Development and Regulation) Act, 2015 (MMDR), which regulates mining activities in the country, earlier allowed transfer of mining lease for auctioned mines only. Balvinder Kumar, in an interview to CNBC-TV18’s Anshu Sharma, says that now captive mines will be able to transfer lease, which was earlier not allowed.
Certain proposals regarding mineral concessions are pending, which will be pushed for in the Budget, he adds. With the new amendment, the stuck M&A deals could be moved in the right direction. The two biggest deals that were stuck were the UltraTech -JP Cement’s Rs 5,400 crore deal and the Birla-Reliance deal for 5 million tonne deal valued at Rs 4,800 crore...
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- While this will not help the old 5400 cr deal as it got merged into the bigger one.
Now it needs to be cleared by Parliament I think before it becomes a lawCommentQuote0Flag