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Pancard Clubs, a company engaged in the development and operation of hotels and resorts, has been ordered to initiate a Corporate Insolvency Resolution Process (CIRP) after defaulting on investor repayments. A group of 100 investors collectively seeking to recover their investment of Rs. 1.5 crore filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Pancard Clubs Ltd. Out of the eight bidders that participated in the auction for the company's properties, only three have submitted firm resolution plans.
Pancard Clubs Ltd. was found to have operated an unregistered collective investment scheme under the guise of a timeshare scheme for purchasing rooms and resorts. The company created this scheme to generate returns on investments based on the time value of money. The company was ordered to refund Rs. 7,035 crore to the investors and wind up the scheme. However, the company appealed to the Securities Appellate Tribunal (SAT), and the properties were put up for e-auction. The Bombay High Court stayed the process, pending further action.
The court has also approved the acceptance of claims beyond the initial 90-day deadline by condoning delayed applications. This allows applicants to file their claims even after the deadline. Many investors across the country have fallen victim to such collective investment schemes.
The sale of Pancard Clubs' properties has been initiated to recover funds and repay the investors. An interim resolution professional, Rajesh Sheth, has been appointed to oversee the insolvent company's day-to-day affairs. The company owes approximately Rs. 1.55 crore to nearly hundreds of petitioners. Over 50 lakh investors invested in the company's offerings. An online auction of 11 properties owned by Pancard Clubs was conducted with a total reserve price of Rs. 253 crore.
The incident highlights the need for vigilance and awareness among investors to avoid falling prey to similar cases across the country.
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