The bankruptcy court in Ahmedabad has rejected Gujarat-based Express Group of Hotels’ revival plan for Neesa Leisure Ltd, which operates a luxury hotel chain under the brand Cambay.
The company has admitted liabilities of Rs 1,580 crore, whereas the resolution plan approved by the lenders proposed to give Rs 150 crore to them to acquire the company through the bankruptcy process. The successful resolution applicant had proposed Rs 250 crore towards capex and fresh funds, bringing the total value of the plan to Rs 400 crore.
“The resolution plan approved by CoC (committee of creditors) has not been done with a process that can be approved by this adjudicating authority as it lacked a due and transparent process of examining each application on its merits,” the division bench of judicial member Chitra Hankare and technical member Velamur G. Venkata Chalapathy said in its order on March 1.
Before the National Company Law Tribunal (NCLT) rejected the plan, Neesa Leisure’s lenders had approved the plan with 67.5% voting.
“The plan has treated the secured creditors to be paid and not considered the claims of unsecured creditors when the majority of the assets are under dispute which are mainly leased properties against which these secured creditors have created exposure,” said the bench.
The bankrupt company’s properties are located in Gandhinagar and Ahmedabad in Gujarat and Neemrana, Udaipur and Jaipur in Rajasthan.
Ahmedabad-based independent counsel and insolvency consultant Vishal J Dave said the way forward, in this case will be the coming together of creditors and working out a fresh plan after correcting issues indicated in the order as some go to the root of the matter.
Originally, the company was admitted under the resolution process following an application filed by Asset Reconstruction Company (I) Ltd in April 2019.
Several strategic buyers and investors are actively scouting for hotel and resort properties under bankruptcy administration for loan defaults, as revenge tourism after Covid-19 lockdowns has made the sector attractive to those with deep pockets.
In January, Hemant Kanoria-promoted Sarga Hotels, which operates a five-star hotel under the Westin brand in Kolkata, was acquired by Shri Ram Multicom under the Insolvency and Bankruptcy Code (IBC) process.
Similarly, investors and strategic buyers have also shown interest in the resolution process of BSE-listed Viceroy Hotels, operator of Marriott Hyderabad and Courtyard Marriott Hyderabad, and Mumbai-based V Hotels Ltd, owner of Tulip Star, earlier known as Centaur Hotel Juhu.
The latest data from the Insolvency & Bankruptcy Board of India showed 7,325 companies were brought into administration until December-end last year. Of these, about 146 companies were from the hotels and hospitality sector.
