Clipped from: https://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/nclat-stays-order-of-nclt-against-appu-hotels/articleshow/84929028.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Synopsis
Originally, on an application from Tourism Finance Corporation of India, the corporate creditor, under Sec.7 of the Insolvency and Bankruptcy Code, the tribunal had on May 2020 initiated Corporate Insolvency Resolution Process (CIRP) against Appu Hotels.
The National Company Law Appellate Tribunal (NCLAT) has stayed the operation of the orders of the first bench of the National Company Law Tribunal (NCLT) here, upholding the sale process of the properties of Appu Hotels for Rs 423 crore under the Insolvency and Bankruptcy Code. MGM Healthcare is said to be the successful purchaser of the properties that include the Le Meridien Hotels in Chennai and Coimbatore.
NCLAT judicial member Justice M Venugopal and technical member V P Singh granted the stay on Friday while passing interim orders on the “company appeal” from Dr Periasamy Palani Gounder, promoter and erstwhile director of Appu Hotels Limited.
Originally, on an application fromTourism Finance Corporation of IndiaNSE 0.14 %, the corporate creditor, under Sec.7 of the Insolvency and Bankruptcy Code, the tribunal had on May 2020 initiated Corporate Insolvency Resolution Process (CIRP) against Appu Hotels.
The “fair value” and “liquidation value” were stated to be Rs 730 crore and Rs 570 crore, respectively.
M K Rajagopalan Balaji, who was appointed as one of the resolution professionals by the tribunal in November last, confirmed the sale.
Challenging this, Periyasamy moved the tribunal, which in its July 15 order this year, upheld the sale process.
Aggrieved, he preferred the present appeal before the appellate tribunal.
Appellant’s counsel contended that a large chunk of financial creditors was deliberately excluded from the entire process and no proper valuation of the assets of the corporate debtor (Appu Hotels) was undertaken.
As per the valuation report furnished in September 2019, the total value of the assets came to Rs 1,641 crore,which was four times the value proposed in the resolution plan submitted by Rajagopalan.
The resolution professionals had facilitated the process by which the resolution applicant was put in a ‘pole position’ to abdicate with assets worth over Rs 1600 crore for a paltry sum of Rs 423 crore.
There was non-consideration of application under Section 12(A) of the Code. The existing resolution plan seeks to convert the corporate debtor into a hospital, which will put at risk numerous employees, vendors and other stakeholders, the counsel argued.
The counsel for the respondent told the appellate authority that the CIRP commenced on May 5, 2020 and on October 12, the resolution plan was submitted by Rajagopalan and the committee of creditors on January 4 this year started the deliberations.
There were several applications and finally there were only two in the fray and a meeting on January 22 approved the plan with a majority of 83 per cent.
All the claims were settled and the upfront is to be paid within 45 days. In fact, Rajagopalan had deposited Rs 150 crore within two weeks and had taken over the property, the counsel added.
The appellate body held that the submissions projected on either side required a detailed rumination and viewed in this perspective, it was of the view that the respondents are to file detailed replies by traversing or dealing with the aspects projected by the appellant.
It granted two weeks’ time to the respondents to file their counter and the matter will be taken up on August 25, it said.
“Till the next date of ‘hearing’, there shall be a stay of the implementation of the impugned order”, it added.