FCC

NCLAT sets aside order to restart sale of Viceroy Hotel

2023-10-12

The Appellate Bankruptcy Tribunal has reversed a ruling by the National Company Law Tribunal (NCLT) to recommence the sale of Viceroy Hotels, the owner of two prominent properties in Hyderabad: the five-star Marriott hotel and the three-star Courtyard hotel. This decision follows a prior NCLT ruling in June, which had rejected a lender-approved plan due to the expiration of the performance bank guarantee provided by the successful resolution applicant, Anirudh Agro Farm.

The NCLT, Hyderabad bench, had ruled on June 9 that the bank guarantee, issued by Kotak Mahindra Bank, was valid for six months commencing from November 11, 2022, and thus expired on May 10, 2023. The NCLT emphasized that since the payment schedule spanned 675 days, the guarantee should cover the entire implementation period. Consequently, the NCLT had declined the plan on the grounds of an expired guarantee.

However, the National Company Law Appellate Tribunal has set aside this decision, contending that the performance bank guarantee issued by Kotak Mahindra Bank was subject to periodic extensions and renewals. Referring to a memorandum dated October 5, the appellate body highlighted the bank's confirmation that the guarantee provided would remain valid and binding.

This reversal by the Appellate Bankruptcy Tribunal represents a significant turn of events in the ongoing case concerning the sale of Viceroy Hotels, bringing potential relief to all parties involved in the resolution process.