NCLT approves Rs 237-crore resolution plan for Leo Meridian Infrastructure Projects & Hotels
The National Company Law Tribunal (NCLT), Hyderabad Bench, has approved the resolution plan for Leo Meridian Infrastructure Projects & Hotels Ltd. (Corporate Debtor) submitted by Jalavihar Entertainment Private Limited Consortium (JEPL Consortium/SRA). The plan, amounting to ₹237 crores, was approved by the Committee of Creditors (CoC) with a 100% voting share.
Background:
The Corporate Insolvency Resolution Process (CIRP) against Leo Meridian Infrastructure Projects & Hotels Ltd. was initiated on April 9, 2019, following a petition filed by Andhra Bank (now Union Bank of India) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. The company, engaged in infrastructure and hospitality projects, had accumulated significant financial liabilities, leading to its insolvency.
Key Details of the Resolution Plan:
- Resolution Applicant: Jalavihar Entertainment Private Limited Consortium (JEPL Consortium), comprising Mr. N.V. Rama Raju, Mrs. N. Indira, Jalavihar Entertainment Private Limited, and North East Infrastructure Private Limited.
- Total Plan Amount: ₹237 crores.
- Payment to Stakeholders: The plan provides for the payment of ₹230 crores to secured financial creditors, ₹1 crore to unsecured financial creditors, and ₹5.13 crores to operational creditors, including employees and government dues.
- Fund Infusion: The SRA has proposed to infuse ₹90 crores into the Corporate Debtor for working capital and capital expenditure over a period of 36 months.
Key Highlights of the Plan:
- Payment Schedule: The plan outlines a two-installment payment structure, with the first installment to be paid within 45 days of NCLT approval and the second within 46-90 days.
- Contingency Provision: A contingency fund of ₹0.86 crores has been set aside to address any unforeseen liabilities arising post-approval.
- Management Control: The implementation of the plan will be supervised by a Monitoring Committee comprising the Resolution Professional, two representatives from the CoC, and two representatives from the JEPL Consortium.
Legal Proceedings:
The resolution process faced multiple legal challenges, including a provisional attachment order by the Directorate of Enforcement under the Prevention of Money Laundering Act (PMLA) and appeals before the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court. The Supreme Court, in its order dated July 26, 2024, directed the CoC to proceed with the resolution process, leading to the approval of the JEPL Consortium’s plan.
NCLT’s Observations:
The NCLT, while approving the plan, referred to the Supreme Court’s rulings in K. Sashidhar v. Indian Overseas Bank and Essar Steel, emphasizing that the commercial wisdom of the CoC should not be interfered with unless the resolution plan violates the provisions of Section 30(2) of the IBC. The tribunal found that the plan complied with all statutory requirements and that the SRA was eligible under Section 29A of the IBC.
Conclusion:
The approval of the resolution plan marks the end of a prolonged insolvency process for Leo Meridian Infrastructure Projects & Hotels Ltd. The JEPL Consortium’s plan aims to revive the company by infusing fresh capital and addressing the financial liabilities of the creditors. The NCLT’s order underscores the importance of adhering to the timelines and statutory requirements under the IBC, while respecting the commercial decisions of the CoC.
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