The National Company Law Tribunal (NCLT) has approved a Rs 595 crore settlement offer from the promoter of Appu Hotels, the operator of five star properties–Hotel Le Royal Meridien in Chennai and Le Meridien in Coimbatore.
This is a rare instance wherein lenders will recover their entire dues. In most resolutions under the Insolvency and Bankruptcy Code (IBC), lenders have recovered less than 30% of dues on average.
On Wednesday, the Chennai bench of the tribunal directed the resolution professional of Appu Hotels to hand over the company to the existing management.
Verified lenders of Appu Hotels have unanimously voted for the settlement plan. “It is trite that the ‘commercial wisdom’ of the CoC cannot be questioned by the adjudicating authority or the appellate tribunal,” the tribunal said in its order.
Lenders, 87% of them by value, had earlier approved a Rs 423 crore plan byM.K. Rajagopal, founder of MGM Healthcare, but this was rejected by the National Company Law Appellate Tribunal (NCLAT) and later upheld by the Supreme Court on grounds that the lender-approved plan was revised and it was not put for voting.
The promoter, Palani G Periaswamy, has offered Rs 595 crore as the settlement amount, which includes Rs 98 crore as payment to equity holders.
M K Rajagopal objected to the settlement plan, calling it a farce since Rs 98 crore is like ‘not paying anything to shareholders.’
About 25% of the settlement amount is to be paid as a cash deposit in a no-lien account with the lead lender State Bank of India, and the rest 75% in the form of a bank guarantee given by a third party iHeart.
The total claim from secured lenders is Rs 340 crore, and from unsecured lenders is Rs 49 crore. The promoter has offered to settle the entire claims of both classes of creditors.
SBI is the largest verified lender to Appu Hotels with claims of Rs 103 crore, followed by IDBI Trusteeship at Rs 76.5 crore. The other lenders are Bank of India (Tokyo branch), IDBI Bank, Indian Bank, and Phoenix ARC. Edelweiss ARC and Allium Finance.
