The National Company Law Tribunal (NCLT) in Hyderabad has dealt a blow to the resolution process of Viceroy Hotels Ltd by rejecting the resolution plan submitted by Anirudh Agro Farms. The rejection stems from the expiration of the performance bank guarantee, which renders the plan non-compliant with the rules set by the Insolvency and Bankruptcy Board of India (IBBI).
Resolution Plan Rejected:
The NCLT bench, comprising judicial member Venkata Ramakrishna Badarinath Nandula and technical member Charan Singh, declared the resolution plan liable for rejection due to the expired performance bank guarantee. The bench also noted that the resolution professional failed to provide adequate explanations for the delay in executing the plan.
Restarting the Sale Process:
In light of the rejection, the NCLT has directed the resolution professional to initiate the sale process anew and complete it within a stipulated period of 60 days. This decision aims to facilitate the resolution of Viceroy Hotels and provide a clear path forward for its creditors.
Viceroy Hotels and its Financial Difficulties:
Viceroy Hotels, a hotel chain with two properties in Hyderabad, had been admitted to the Insolvency and Bankruptcy Code (IBC) in 2018. The rejection of the resolution plan poses significant challenges for the company’s lenders who had previously approved the plan in September 2022. The plan involved the acquisition of Viceroy Hotels by Anirudh Agro Farms for a sum of Rs 168.5 crore.
Implications of the Rejection:
The rejection of the resolution plan signifies a setback in the resolution process for Viceroy Hotels. With the expiration of the performance bank guarantee, the company’s lenders and stakeholders face further delays and uncertainties. The financial difficulties faced by Viceroy Hotels, compounded by the rejection of the resolution plan, may push the company closer to the possibility of liquidation.
Conclusion:
The NCLT’s rejection of the resolution plan for Viceroy Hotels due to the expired performance bank guarantee raises concerns about the future of the company’s resolution process. Restarting the sale process within a prescribed timeline is aimed at expediting the resolution and offering a potential solution for the troubled hotel chain. However, the rejection poses challenges for Viceroy Hotels’ lenders and increases the likelihood of the company being liquidated if a viable resolution is not reached in a timely manner.
