NCLAT reverses NCLT order; approves resolution plan of Viceroy Hotels

The Chennai bench of National Company Appellate Law Tribunal (NCLAT) has approved Agro Farms Private Limited’s resolution plan for Hyderabad-based Viceroy Hotels. Hearing an appeal from filed by Anirudh Agro Farms Private Limited, the NCLAT reversed the 9th June 2023 NCLT order, which had rejected the resolution plan on the ground that bank guarantee furnished by the successful resolution applicant (Agro Farms Private Limited) did not cover the resolution plan implementation schedule. The NCLT had ordered the resolution professional to invite fresh expression of interest (EoI) and complete the resolution process within 60 days.

The NCLT had in its order 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.

The NCLAT shrugged off these objections after Kotak Mahindra Bank, which provided the bank guarantee clarified that the bank guarantee is still currently alive and subsisting in the Bank’s system and the said `PBG’, is valid till date and continues to be valid till the full `Resolution Plan amount’ is paid.

Meanwhile, the resolution plan has a provision paying off Rs 151.5 crore of the debt against total admitted claims of Rs 768 crore.  Of the Rs 151.5 crore provided in the resolution plan, Rs 51.5 crore will be paid upfront by Agro Farms Private Limited.

As per the resolution plan, financial creditors would receive Rs 150 crore against their admitted claims of Rs 774 crore, while vendors and related parties would receive only Rs 50 lakh against their admitted claims of Rs 22 crore. Workmen and employees together get Rs 61 lakh as per the resolution plan.

As part of the Resolution Plan, it is proposed that the successful resolution applicant shall infuse funds (Upfront amount) for an amount equivalent to INR 60 crores in one or more tranches in a manner and in such time and intervals, as determined necessary by AAFPL, into the Company by way of equity or otherwise thereof hereby termed as Initial Fund Infusion which shall be utilized towards discharge/settlement of the Admitted Operational Creditors Debt; Workmen/ Employee dues, Upfront FC Debt Payment, unpaid CIRP cost and Working capital purposes.

As part of this Resolution Plan equity shares of Viceroy Hotels held by the existing public shareholders post such restructuring and reorganization will be 6,31,579 shares, constituting 1% of the issued and paid-up equity share capital of the corporate debtor. 

The resolution plan by Anirudh Agro Farms was approved by the CoC by 95.82% vote share.

Viceroy Hotels has been undergoing the Corporate Insolvency Resolution Process (CIRP) since 2018. Asset Reconstruction Company (India) Limited, or ARCIL, had filed the insolvency petition against Viceroy Hotels for defaulting on payment of Rs 321 crore.

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