Appu Hotels CIRP period extended by 90 days
The Corporate Insolvency Resolution Process (CIRP) of Chennai-based Appu Hotels continues to get dragged even as the promoters propose a settlement with the creditors. The National Company Law Tribunal (NCLT) in an order on 13th July 2022 has given an extension of 90 days for the completion of the CIRP.
Earlier in June also, the NCLT had given an extension to the CIRP period by ordering the exclusion of the period of appeal filed by the successful resolution applicant against an NCLAT order setting aside the approval of resolution plan by NCLT.
The CIRP of Appu Hotels began in May 2020 following an application filed by Tourism Finance Corporation of India Ltd (TFCIL), and the Chennai bench of the NCLT approved the resolution plan by M K Rajagopalan in July 2021. Appu Hotels owed a total of Rs 438 crore to different creditors – Rs 389 crore to financial creditors and the rest to operational creditors. Against this claim, the resolution plan submitted by Mr Rajagoplan offered to pay Rs 398 crore to the creditors. The resolution plan offered to pay 100% of the financial creditors claim. However, the resolution plan does not make any provision for payment to related parties, which had put in claims of Rs 45 crore.
There were three resolution applicants, and the Committee of Creditors (CoC) approved the resolution plan by M K Rajagopalan by 87.4% vote share.
And while three resolution plans were being considered by the Committee of Creditors, the promoter of Appu Hotels also submitted an application for one-time settlement under Section 12A of the Insolvency and Bankruptcy Code. However, the resolution professional Radhakrishnan Dharamrajan never put the application before the CoC for discussion.
One of the promoters — Dr Periasamy Palani Gounder — then moved National Company Law Appellate Tribunal (NCLAT) against the approval of resolution plan.
Gounder had in his appeal objected to the resolution professional’s rejection of its two claims – one as financial creditor and another as operational creditor — on the ground that it is a related party.
The appellant argued at NCLAT that the current resolution plan is discriminatory as it denies payments to the Appellant because of it being a related party.
The NCLAT concurred with Gounder’s argument and set aside the approval of resolution plan by saying that the approved resolution plan discriminates between the related party unsecured financial creditors with other unsecured financial creditors.
The resolution applicant has now moved Supreme Court against the NCLAT’s order. The appeal is pending in court.
Also read: Related party financial, operational creditors cannot be discriminated against in resolution plan
