Tulip Hotels in insolvency for failing to pay Rs 900 cr to Yes Bank
Ajit Kerkar-owned Tulip Hotels Pvt Ltd (corporate debtor) will undergo corporate insolvency resolution process (CIRP) after the Mumbai-bench of the NCLT admitted an insolvency petition filed by JC Flowers Asset Reconstructions Pvt. Ltd against the company.
The insolvency application against Tulip Hotels was initially filed by Yes Bank, which subsequently assigned the loan to JC Flowers. The insolvency petition was with respect to Rs 900 crore default by Tulip Hotels.
Gaurav Adukia has been appointed as the interim resolution professional in the case.
According to the submission made by the financial creditor (JC Flowers Asset Reconstructions), the corporate debtor defaulted payment under two guarantees aggregating to Rs.900 crore in its capacity as a guarantor guaranteeing repayment of the loans disbursed by the petitioner to Cox and Kings Limited and Ezeego One Travel & Tours Limited, both companies promoted by Ajit Kerkar and family.
Both Cox and King and Ezeego committed severe breach and default in repayment of financial debt which included principal amount, interest and other charges, forcing the financial creditor to invoke the guarantees and ask Tulip Hotels to make the payment of Rs 900 crore.
“The Corporate Debtor till date has failed to repay the guaranteed amount as mentioned in the Letter of Invocation of Guarantee,” submitted the financial creditor in NCLT.
Tulip Hotels countered by saying that it is not related to Cox and Kings or Ezeego One Travel & Tours Ltd. It also pleaded in NCLT that Tulip Hotels has not received any funds from Cox and Kings since 31March 2011 and has never been funded by Ezeego One Travel & Tours Ltd.
“There are no investments of Cox and Kings Ltd. or Ezeego One Travel & Tours Ltd. in Tulip Hotels (P) Ltd. and there are no cross holdings of Tulip Hotels (P) Ltd in any of the said borrowers. Tulip Hotels is neither aware of any financial assistance been provided to either Cox and Kings Ltd or Ezeego One Travel & Tours Ltd nor it has sought any assistance from Yes Bank,” said the corporate debtor in its submission.
The Corporate Debtor further said that it did not receive any notice invoking the said corporate guarantees and hence could have never received the Letters of Invocation of Guarantee.
It even went on to say that the signatures appearing on deed of guarantee pages do not belong to anyone representing the company.
However, the NCLT bench observed that the liability of corporate debtor cannot be done away even if there was any irregularity in the execution of the mortgage deed or creation of mortgage without NOC from existing mortgagee – IFCI — pointed out by the Corporate Debtor is believed.
“The application made by the financial creditor is complete in all respects as required by law. It clearly shows that the corporate debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC,” the tribunal noted in its order.
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