The National Company Law Appellate Tribunal (NCLAT) has stayed a lower court’s order asking creditors of Rajesh Business & Leisure Hotels to restart a bankruptcy process after an appeal by lead lender ICICI Bank.
The Rs 492 crore resolution plan by a Rare ARC-Check-Inn Hotels Pvt Ltd consortium had envisaged about 79% recovery on lender dues of more than Rs 621 crore. But more than a year after the committee of creditors (CoC) had approved the plan, a Mumbai bench of the NCLT ordered a fresh process citing procedural issues that ICICI Bank had challenged.
Check-inn Hotels is a subsidiary of the Mumbai based Shree Naman Group.
Hearing the matter late last month, a three-judge bench led by NCLAT chairman Ashok Bhushan in a short two page order allowed all parties in the case to file a reply within two weeks, while staying the NCLT order asking the resolution professional (RP) and CoC to re-run the process.
Losing bidder Sankalp Recreation and promoter Rajesh Lifespaces had challenged the CoC’s decision via separate applications. The case hearing has been posted for October 1.
“This is a strange case where the court took almost 16 months to deliver an order even after the CoC had approved the resolution plan unanimously. Promoters and competing bidders usually have some grievances most of the time but the court always goes by the wisdom of creditors. This time after delaying the matter for so long the court had sought a re-run of the process,” said a person familiar with the details.
Lenders had unanimously voted for the Rare ARC and Naman Group consortium to takeover Rajesh Business’ defunct five-star hotel under the ‘The Chedi’ brand at Kanjurmarg near Powai in March 2023. The NCLT order came only in July 2024. ICICI Bank has the largest exposure to the company with Rs 331 crore of loans (53%), followed by Bank of Baroda (BoB) with Rs 162 crore (26%) and Union Bank of India with Rs 128 crore (21%). The claims from banks are in the form of external commercial borrowings and bank guarantees.
The Rare-Naman Group consortium had offered Rs 461 crore upfront in cash within 60 days of the NCLT approval with another 5% equity in the company valued at Rs 31 crore which meant a 79% recovery for lenders. It had also envisaged bearing the full insolvency process cost of Rs 12 crore and 3% of admitted claim of operational creditors at Rs6 crore. The consortium had submitted a Rs 30 crore bank guarantee.
Sankalp Recreation together with Globe Ecologistics had submitted a higher valued plan at Rs 530 crore but lenders chose the Rare ARC-Check Inn consortium because a majority of Sankalp’s payments (Rs480 crore) were only after a year.
