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The National Company Law Appellate Tribunal (NCLAT), Chennai, on Friday has stayed the implementation of a National Company Law Tribunal (NCLT) order approving MGM Healthcare’s managing director MK Rajagopalan’s ₹423 crore bid to take over Appu Hotels Ltd.
Appu Hotels Ltd operates Le Meridien Chennai, Coimbatore and the Riverside Spa and Resorts.
The NCLAT order by Justice M Venugopal - Member (Judicial) and VP Singh, Member (Technical), was on an application by Periasamy Palani Gounder (appellant), promoter and erstwhile director of Appu Hotels.
On July 15, 2021, the NCLT had passed an order initiating the corporate insolvency resolution process in relation to Appu Hotels (the debtor). This was based on an application filed by the Tourism Finance Corporation of India (financial creditor) on May 5, 2020.
The list of financial and operational creditors were listed as on December 14, 2020 and fair value was at ₹730.88 crores and liquidation value at ₹569.33 crore. The Interim Resolution Professional (Mukesh Kumar Gupta) received Resolution Plans from Madhav Dhir; Rajagopalan and Kotak Special Situations. Subsequently, Rajagopalan provided a detailed plan with a total consideration of the Resolution Plan being ₹423 crores, the NCLT order said.
After hearing at the ‘admission stage’, the counsels for the parties granted two weeks' time to the respondents - Radhakrishnan Dharmarajan (Resolution Professional, Appu Hotels) and Rajagopalan - to file a detailed reply to the ‘appeal’ filed by the appellant.
The appellant, moving the NCLAT, alleged that the whole ‘Resolution Process’ was vitiated by numerous statutory violations of the provisions of the Insolvency and Bankruptcy Code (IBC). Rajagopalan was put in a pole position to acquire assets worth over ₹1,600 crore for a paltry sum of ₹423 crore, he alleged.
The appellant said that he was ready to pay all the financial creditors, operational creditors and unsecured financial creditors, and would deposit ₹450 crore and he required two or three days times in this regard.
The ‘Adjudicating Authority’ had failed to take note of the fact that unsecured financial creditor (constituted around 12.61 per cent of the total vote share of the Committee of Creditors’) were deliberately left out of the ‘Committee of Creditors’. In short, the decisions taken by an improperly constituted ‘Committee of Creditors’ is an invalid one, the appellant said.
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