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NCLT Says SBI Must Receive Security-Linked Liquidation Value
AA Estates is going through an insolvency process, in which its debts and assets are being handled under a plan.
State Bank of India disagreed with the plan approved by most lenders.
The bank said it should receive at least the value linked to the property pledged as security for its loan.
The tribunal agreed that this minimum should not be limited to the total value offered under the plan.
It asked the person managing the insolvency process to work out what SBI is owed.
That person must also say whether the plan pays SBI in cash.
The tribunal also kept a performance-security amount of Rs 1.80 crore.
It said the interests of homebuyers need attention as the plan is considered further.
The NCLT Mumbai Bench ruled that dissenting creditor SBI is entitled to at least the liquidation value attributable to its security interest.
The tribunal rejected a CoC clause that capped SBI’s minimum payment at the total value offered under the resolution plan.
The plan, approved on January 30, 2026, received 78.62% support; SBI, with a 21.37% voting share, opposed it.
The tribunal directed the resolution professional to calculate SBI’s entitlement and report whether the plan provides for payment in cash.
It upheld Rs 1.80 crore in performance security and raised concerns about protecting homebuyers’ interests.
- Who
- The NCLT Mumbai Bench, State Bank of India, AA Estates Pvt Ltd, and the resolution professional.
- What
- The tribunal ruled SBI is entitled to at least the liquidation value attributable to its security interest and ordered the resolution professional to calculate it.
- Where
- Mumbai, India.
- When
- The order was pronounced on October 7, 2026; the report is dated October 9, 2026.
- Why
- SBI challenged a resolution-plan clause that capped its minimum payment at the plan’s total value.
SBI’s position
Resolution-plan cap
Minimum payment to dissenting creditor
SBI’s position
SBI argued its payment should be no less than the liquidation value attributable to its security interest, determined under the IBC distribution mechanism.
Resolution-plan cap
A Committee of Creditors resolution said dissenting financial creditors’ payment should not exceed the value of the approved resolution plan because the plan’s value was below the corporate debtor’s liquidation value.
Key facts
- Creditor
- State Bank of India (SBI), holding a 21.37% voting share in the Committee of Creditors.
- Plan approval
- Approved January 30, 2026, with 78.62% voting support, despite SBI’s dissent.
- Plan outlay
- Approximately Rs 579.95 crore.
- Homebuyer flats estimate
- Around Rs 543.95 crore, assuming all homebuyers choose flats rather than cash alternatives.
- Valuation—KKCA Valuers LLP
- Consolidated fair value: Rs 267.94 crore; liquidation value: Rs 214.34 crore.
- Valuation—Bhavin Patel and Vinit Sangoi
- Consolidated fair value: Rs 101.05 crore; liquidation value: Rs 76.65 crore.
- Performance security
- Rs 1.80 crore, calculated as 5% of the plan’s Rs 36-crore cash component.
Quotes
National Company Law Tribunal, Mumbai Bench
The tribunal hearing AA Estates’ insolvency proceedings.
“The said paragraph shall result into determination of minimum liquidation value available to the operational creditor as well as dissenting financial creditor subject to maximum of resolution plan value, instead of value of its security interest.”
freepressjournal.in
Sources
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