Experion Developers : Know Everything About ED, IBBI probe alleged misuse of Insolvency and Bankruptcy Code By Experion Developers

Experion Developers under scanner: ED, IBBI probe alleged misuse of Insolvency and Bankruptcy Code in Gurugram land deal

New Delhi / Gurugram – Experion Developers Private Limited (“Experion Developers”), a real estate-focused fund and developer active in the Delhi–NCR market, is facing heightened scrutiny from both the Enforcement Directorate (ED) and the Insolvency and Bankruptcy Board of India (IBBI) over allegations that it misused provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) to corner a prime 9.3-acre land parcel in Gurugram’s Sector 62.

What is currently unfolding goes beyond a single distressed asset transaction. It raises structurally important questions around creditor committee capture, conflicts of interest when resolution applicants also become major financial creditors, and the interface between IBC-driven resolutions and PMLA-led asset attachments.

The backdrop: Dignity Buildcon, PMLA attachment and Experion’s entry

The controversy centres on Dignity Buildcon Pvt Ltd (DBPL), a company engaged in developing commercial towers on Gurugram’s Golf Course Extension Road. DBPL’s debt-laden project eventually landed in corporate insolvency resolution proceedings (CIRP) under the IBC.

According to filings and earlier coverage, Experion Developers – described as a Singapore-backed real estate-focused fund – offered about ₹450 crore for Dignity Buildcon, in a resolution plan that was projected to deliver roughly 50% recovery for lenders. The plan was reportedly approved by over 99% of lenders by value, positioning Experion as the successful resolution applicant (SRA).

Parallel to the IBC process, the Enforcement Directorate was investigating a Prevention of Money Laundering Act (PMLA) case against Religare Finvest, during which the agency attached certain assets belonging to Dignity Buildcon, including a 9.3-acre land parcel in Sector 62, Gurugram.

It is this attached land – sitting at the intersection of IBC and PMLA – that has now triggered a major controversy.

ED’s case: allegations of CoC capture and misuse of Section 30(5)

In a detailed application filed before the National Company Law Tribunal (NCLT), the ED has accused Experion Developers and its group company Experion Capital (ECPL) of “glaring misuse” of the IBC framework, particularly Section 30(5), in the Dignity Buildcon resolution.

Key elements of the ED’s allegations include:

1. Acquisition of creditor debt and voting control

According to the ED, financial creditors who had suffered losses due to Dignity Buildcon’s default assigned their debts to ECPL, allowing a steep haircut of about 70.17% on the original exposures.

By purchasing these loans, ECPL allegedly acquired around 60% of the voting rights in the Committee of Creditors (CoC). Alongside this, the ED says ECPL exerted undue influence over a key CoC member – Alchemist ARC – which held a further 35% of the voting share.

Taken together, this structure is alleged to have given the Experion group effective control over about 95% of CoC voting power, enabling it to decisively shape the outcome of the CIRP.

2. “Glaring misuse” of Section 30(5) IBC

Section 30(5) of the IBC allows a resolution applicant to attend CoC meetings where its plan is considered, but expressly bars it from voting unless it is also a financial creditor.

ED’s contention is that Experion – by ensuring that its group entity ECPL became a dominant financial creditor – converted itself into both resolution applicant and controlling CoC member, thereby allegedly defeating the spirit of Section 30(5).

ED’s filing states that ECPL:

• Spent approximately ₹223.92 crore to acquire 60% of CoC voting rights, and

• Later received about ₹334.08 crore from Experion Developers (EDPL) after the resolution plan was approved, a flow of funds which the agency characterises as part of the “glaring misuse” of the process.

3. Alleged coercion and a “manoeuvred” CoC vote

ED further alleges that the successful resolution applicant:

• “Exercised undue influence” over Alchemist ARC, effectively compelling the ARC to support Experion’s resolution plan despite its alleged financial inferiority.

• Deliberately stalled the CIRP until the composition of the CoC and the distribution of voting rights had shifted in its favour.

The ED has been quoted as saying that the CoC, substantially influenced by the SRA and its related entities after they became CoC members, was “manoeuvred into approving a resolution plan that was financially inferior and not commercially justifiable,” prejudicing other prospective resolution applicants (PRAs) and undermining the fairness and transparency of the process.

4. Impact on the attached Gurugram land parcel

The crux of the ED’s concern is that this alleged structuring enabled Experion Capital to secure the 9.3-acre land parcel in Sector 62 – an asset that had been attached by ED during the Religare Finvest PMLA probe – by leveraging its acquired CoC control and the IBC machinery.

On this basis, the agency has asked the NCLT to recall its May 2023 order that had approved the Experion-led resolution plan for Dignity Buildcon.

Alleged irregularities: what ED says went wrong

Read together, the ED’s filings and media leaks amount to a set of serious alleged irregularities:

1. CoC capture and conflict of interest
   By becoming the dominant financial creditor (through ECPL) while also being the resolution applicant (through EDPL), Experion is alleged to have blurred the line between creditor and bidder, creating a structural conflict of interest that allowed it to heavily influence – and allegedly pre-determine – the CoC decision.

2. Economic benefit from haircuts it helped design
   ED claims ECPL reaped the benefit of a 70.17% haircut granted by original lenders when they assigned their debt, and then used those same assigned debts (with reduced economic exposure) to vote in favour of its own group’s plan, effectively arbitraging the insolvency framework.

3. “Financially inferior” plan pushed through a reconstituted CoC
   The agency asserts that alternative bids or potential competing resolution applicants were disadvantaged because the CoC vote was controlled by entities related to the SRA. That, according to ED, undermines the competitive, market-discovery logic that underpins IBC resolution processes.

4. Use of IBC to neutralise PMLA attachment
   Because the key asset was already under attachment in a money-laundering investigation, ED views the eventual transfer of that asset via an IBC resolution as a possible circumvention of PMLA’s objective of preserving proceeds of crime for eventual restitution. This concern is not unique to this case; ED and IBBI have, in recent months, worked on standard operating procedures to address precisely such conflicts between IBC and PMLA.

These irregularities remain allegations at this stage. Whether they amount to illegality or only highlight gaps and grey areas in the IBC will ultimately be determined by adjudicating authorities and, potentially, higher courts.

Experion Developers’ response: “Debt assignments fully paid; everything placed before NCLT”

Experion Developers has categorically rejected the ED’s allegations, describing them as “baseless”.

The company’s key counter-points, as reported, are:

• Debt assignments were legitimate and fully paid for
  A spokesperson has stated that all assignments of debt to ECPL were backed by actual consideration, and that there was no sham or preferential arrangement in how these exposures were acquired.

• Full disclosure of CoC changes
  Experion says every change in CoC composition was placed before the NCLT and that the updated CoC structure was published on the IBBI website, implying adherence to transparency and procedural requirements.

• Legal permissibility of creditor–resolution applicant dual role
  The company emphasises that current law permits a financial creditor to also be a resolution applicant, subject to Section 29A eligibility. In their view, the structure used in Dignity Buildcon’s case was within the four corners of the IBC and does not, by itself, imply any mala fide intent.

• Challenge to ED’s attachment of DBPL’s assets
  Experion’s spokesperson points out that ED had earlier informed the Delhi High Court that it intended to attach properties of RS Infrastructure, not Dignity Buildcon. The later attachment of DBPL’s assets is thus characterised by Experion as erroneous and obstructive of the company’s revival, and it notes that the High Court granted interim protection over the attached assets.

In essence, Experion’s defence is that what ED calls “misuse” is, in fact, a lawful exploitation of options permitted by the IBC, with full disclosure to the adjudicating authority.

IBBI steps in: regulatory action against the insolvency professional, SFIO probe proposed

The issue has now squarely landed before the sector regulator.

In a written reply to Rajya Sabha MP Deepak Prakash, the IBBI has confirmed that it is taking regulatory action in respect of alleged contraventions by the concerned Insolvency Professional (IP) supervising the Dignity Buildcon CIRP. The Board has said this is being done under the IBC read with the IBBI (Inspection and Investigation) Regulations.

Key points from the IBBI communication:

• Regulatory scrutiny on the IP
  IBBI is examining whether the IP properly discharged duties relating to CoC constitution, conduct of the CIRP, and evaluation of resolution plans, in light of ED’s allegations about CoC capture and undue influence.

• Reference to SFIO for criminal investigation
  The Board has told the MP that certain issues raised require criminal investigation, and therefore the Ministry of Corporate Affairs (MCA) has been requested to consider ordering a Serious Fraud Investigation Office (SFIO) probe into the matter.

• Acknowledgment of ED’s concerns but no premature conclusions
  While noting ED’s allegations and its own ongoing action, IBBI has also indicated that it will be up to ongoing investigations to determine whether any actual misconduct occurred, signalling a cautious, due-process-based approach.

This places the Dignity Buildcon–Experion transaction in a rare category: a resolution process that is simultaneously under the scanner of ED, IBBI and potentially SFIO.

ED’s broader push against IBC “misuse”

The Experion case is unfolding against a larger backdrop of ED’s increasing focus on alleged misuse of IBC to push through undervalued land sales and to sidestep money-laundering attachments.

• In recent weeks, ED has publicly highlighted cases where it believes the IBC process was misused to enable undervalued land sales, including raids on NCLT-linked intermediaries and other developers in the NCR region.

• Separately, ED and IBBI have jointly developed new standards and a standard operating procedure to ensure that assets attached under PMLA are restored to cheated homebuyers and banks, aligning insolvency outcomes with anti-money-laundering enforcement.

Within this enforcement climate, the Experion–Dignity Buildcon transaction has effectively become a test case for how far resolution applicants can go in acquiring creditor positions and structuring CoC majorities without crossing into regulatory or criminal risk.

How exactly was the IBC said to be misused?

From a legal-policy perspective, the alleged misuse in this case can be broken down into three conceptual buckets, all of which are rooted in ED’s version of events:

1. Dual role of resolution applicant as dominant financial creditor
   Section 30(5) permits a resolution applicant to attend CoC meetings, but not vote unless it is also a financial creditor. The ED’s argument is that Section 30(5) was not intended to allow an SRA to first become the dominant financial creditor (via massive debt purchases) and then vote on its own plan, effectively eliminating independent creditor oversight.

2. Designing economics from both sides of the table
   By allegedly benefiting from a 70.17% haircut as assignee of lender debt while simultaneously determining recovery distributions as SRA, ECPL/Experion is said to have sat on both sides of the bargaining table. In ED’s framing, this compromises the arm’s-length nature of CoC decision-making and may result in underpriced acquisition of valuable real estate, including assets previously attached as proceeds of crime.

3. Interaction with PMLA attachments
   PMLA is designed to freeze and ultimately confiscate proceeds of crime, while IBC is aimed at reviving distressed companies and maximising creditor value. When an ED-attached asset is transferred through an IBC resolution that ED believes is structured and controlled by the eventual beneficiary, the agency sees this as using insolvency law to wash or neutralise an attachment, even if the formalities of IBC are followed.

4. Whether courts ultimately agree that these facts amount to “misuse” of the IBC or simply aggressive – but lawful – financial engineering will be critical in shaping future jurisprudence on Section 30(5), CoC composition and related-party issues.

What happens next?

As on date:

• ED’s application to recall the NCLT’s May 2023 approval of Experion’s resolution plan is pending before the tribunal.

• IBBI is conducting regulatory action against the concerned insolvency professional, and

• MCA is considering an SFIO probe based on IBBI’s reference.

Experion Developers, for its part, continues to deny all allegations of wrongdoing, maintaining that its acquisition of creditor debt, its participation in the CoC, and the approval of its resolution plan all complied with the letter of the law and were transparently disclosed to NCLT and IBBI.

For policymakers, regulators and market participants, the outcome of this case will be closely watched. It is likely to influence:

• Future IBBI guidance on CoC constitution and related-party creditors,

• The practical scope of Section 30(5) where resolution applicants are also financial creditors, and

• How PMLA attachments are treated in IBC-driven restructurings, particularly in the real estate sector where land parcels are often the key underlying assets.

Until the investigations and judicial proceedings conclude, the Experion–Dignity Buildcon case will remain a live example of the tension between resolving insolvency efficiently and preventing abuse of the insolvency framework to capture valuable, sometimes tainted, assets.