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IL&FS has moved the Mumbai bench of the National Company Law Tribunal (NCLT) seeking to disqualify Brookfield's affiliate, Chronos Properties, from acquiring its marquee commercial property in Bandra Kurla Complex (BKC), Mumbai. The objection comes after Chronos failed to renew an INR 108 crore performance guarantee, which expired this week. IL&FS alleges that this breach voids the Letter of Intent (LoI) issued for the INR 1,080 crore transaction. With commercial property rates in BKC surging, IL&FS now wants the bid scrapped and permission to entertain new offers. The tribunal is currently reviewing the case.
IL&FS has raised a strong objection before the Mumbai NCLT against the INR 1,080 crore bid submitted by Brookfield's affiliate Chronos Properties to acquire its headquarters building in Bandra Kurla Complex. The company has requested the tribunal to declare the bid as non-existent and ineligible, citing that the bidder failed to renew a mandatory performance bank guarantee of INR 108 crore, which expired earlier this week. Advertisement
In its submission, IL&FS pointed out that the terms of the Letter of Intent issued to Chronos in 2022 explicitly required the bidder to renew or extend the bank guarantee at least 15 days before its expiry. This was to ensure continued bid validity and seriousness. However, according to IL&FS, Chronos failed to comply with this requirement, thereby breaching the conditions of the bid and rendering the LoI void.
The company argued that this non-compliance is not a mere technicality but a critical lapse, especially given that the sale is part of IL&FS's broader resolution strategy under insolvency proceedings. The building in question is a landmark asset and was expected to bring significant relief to creditors. However, with the current bid entangled in legal complications, the resolution timeline now stands to be delayed further.
IL&FS has further highlighted that property values in BKC have appreciated sharply since the original bid was submitted. Sources indicate that commercial capital values in the area have risen by 20-25%, and this may have contributed to Brookfield's reluctance to renew the guarantee, possibly viewing the bid terms as no longer favourable.
The building remains unoccupied and is currently generating no rental income. This has further added pressure on IL&FS, as prolonged delays may impact the realisation value for creditors. The company is now seeking to cancel the LoI and restore its right to invite offers from other interested bidders who may match the present market rates.
Brookfield, when approached, chose not to offer any comment on the matter, stating that the issue is sub judice. Meanwhile, the NCLT has issued an interim direction to IL&FS, asking it not to create any third-party rights or dispose of the property until the case is heard and decided.
This dispute also comes against the backdrop of IL&FS's ongoing efforts to resolve its multi-billion rupee debt, following the collapse of the group in 2018 due to massive defaults across subsidiaries. The BKC building sale was one of the most high-profile asset monetisation efforts aimed at partially repaying creditors.
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