NCLT rejects resolution plan for Viceroy Hotels; orders invitation of fresh EOIs
The Hyderabad bench of the National Company Law Tribunal (NCLT) has rejected the Rs 168.5 crore resolution plan submitted by Anirudh Agro Farms Limited for Viceroy Hotels on the basis of the fact that the Performance Bank Guarantee provided by the successful resolution applicant does not cover the resolution plan Implementation schedule. The NCLT has ordered the resolution professional to invite fresh expression of interest (EoI) and complete the resolution process within 60 days.
The NCLT noted that Anirudh Agro Farms has provided a bank guarantee of Rs 16.8 crore issued by Kotak Mahindra Bank in favour of Asset Reconstruction Company (India) Ltd for a period of six months commencing from 10 November 2022.
However, as per the Resolution Plan submitted by the Committee of Creditors (CoC) timeline for payment of total resolution plan amount of Rs.168.50 crores in five tranches within 675 days from the day of approval of the plan.
Having found that the Performance Bank Guarantee furnished by Anirudh Agro Farms does not cover the Plan Implementation Schedule, the NCLT during a hearing on 09 December 2022 asked the resolution professional — Govindarajula Venkata Narasimha Rao — to explain how he had ensured compliance of Regulation 36B (4A) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
The resolution professional of Viceroy Hotels had then made the following statement:
SRA has proposed payment to all creditors in five tranches as per the approved resolution plan and the payments made under any prior tranches are liable to the forfeited if the SRA fails to make payments under the subsequent tranches as per the agreed terms and timelines given in the Resolution Plan.
However, the NCLT said that the above ‘clarification undertaking’ of the successful resolution applicant as filed cannot be accepted or even construed as compliance of the above mandatory Regulation, for the simple reason that unilateral clarificatory undertaking cannot result in extending Bank Guarantee beyond six months from 10 November 2022.
Therefore, ‘Performance Bank Guarantee’ from the successful resolution applicant being non-est, in the eye of law as on date, non-compliance of the mandatory Regulation 36B (4A) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is apparent, noted the NCLT in its order dated 9 June 2023.
“We have no alternative but to reject the Resolution Plan on the ground of noncompliance of the statutory provision,” the NCLT order says.
Resolution plan submitted by Anirudh Agro Farms for Viceroy Hotels
As per the resolution plan, the financial creditors would receive Rs 167 crore (Rs. 150 Crores in cash and 4% equity shares with buy back guarantee of 17 crore) as against their admitted claims of Rs 743 crore.
Employees and workmen would have gotten Rs 90 lakh, and operational creditors would receive Rs 50 lakh. Rs 10 lakh would have gone towards payment of statutory dues.
The resolution plan by Anirudh Agro Farms was approved by the CoC by 95.82% vote share.
Others in the race for Viceroy Hotels were Innopark (India) Private Limited, Terminus Hotels & Resorts Pvt Ltd.; Kailash Darshan Housing Development (Gujarat) Pvt Ltd and Unison Hotels Private Limited.
Also Read: Five bidders in fray for Viceroy Hotels
