Dedicated locality research platform
Dedicated locality research platform
Enter your email address and you will receive
a link to reset your password
The National Company Law Appellate Tribunal (NCLAT) has issued a verdict in favour of the existing promoters of Appu Hotels regarding a takeover bid by MGM Healthcare's Managing Director M K Rajagopalan. In a significant decision, the Divisional Bench-1 in Chennai has reinstated the powers of the Board of Directors that were previously suspended. The management and affairs of the Corporate Debtor, Appu Hotels Ltd. (AHL), have been directed to be returned to the original board, including possession and control of assets.
This move signifies the acceptance and allowance of the settlement proposal put forward by the Promoter of Appu Hotels, Palani G Periasamy. Consequently, the resolution process has been withdrawn, and AHL's original "Board of Directors" has been reinstated.
This decision holds particular importance as it paves the way for the full-scale operation of the esteemed Hotel Le Royal Meridien in Guindy, Chennai, marking a significant step forward for the company.
The reopening of Hotel Le Royal Meridien Chennai and Le Meridien Coimbatore at the cusp of the New Year is a significant development for AHL. Meanwhile, the National Company Law Tribunal (NCLT) has given its approval to the Rs. 595 crore settlement offer presented by the promoter of Appu Hotels. This exceptional case stands out as a rare instance where lenders are set to recover their entire dues, a stark contrast to the typical recovery rates averaging below 30% in most Insolvency and Bankruptcy Code (IBC) resolutions.
The tribunal's direction for the resolution professional to transfer the company back to the existing management underscores the unanimous support the settlement plan garnered from verified lenders of Appu Hotels. The tribunal emphasised and appreciated the 'commercial wisdom' of the Committee of Creditors (CoC), which unanimously backed the promoter's settlement proposal.
Palani G Periaswamy's settlement offer of Rs. 595 crore, inclusive of a Rs. 98 crore payment to equity holders, has been contested by MK Rajagopal. Rajagopal criticised the settlement, arguing that the equity holders' payment of Rs. 98 crore equates to virtually nothing.
The settlement structure involves 25% as a cash deposit in a no-lien account with the lead bank and 75% in the form of a bank guarantee provided by a third party, iHeart. It encompasses the full settlement of claims from both secured and unsecured lenders, aiming to address the dues of all classes of creditors.
With State Bank of India holding the largest verified claim of Rs.103 crore, followed by IDBI Trusteeship at Rs. 76.5 crore, the settlement offers a comprehensive resolution to the claims from various lenders.
The resolution in favour of Appu Hotels' promoter not only marks a significant milestone for the company but also sets a precedent for rare and complete debt resolution under the IBC framework. As AHL gears up to resume operations under its original management, this outcome represents a beacon of hope for industries navigating financial distress in challenging times.
Propscience is India’s dedicated property news portal. We cover the latest events, news, trends, deals, new launches and more.
All our services and tools are completely free of cost and available 24X7!
