In a reprieve to Appu Hotels, which owns Le Royal Meridien Hotels in Chennai and Coimbatore, the National Company Law Appellate Tribunal (NCLAT) set aside the sale process of the hotels’ properties for Rs 423 crore under the Insolvency and Bankruptcy Code (IBC).

M K Rajagopalan, chairman, MGM Healthcare, was the successful bidder in his personal capacity for the properties that include the two Le Royal Meridien Hotels, besides vacant land parcels near Chennai airport.

Setting aside the nod for the sale by the National Company Law Tribunal (NCLT), the NCLAT bench comprising judicial member Justice M Venugopal and technical member V P Singh granted opportunity to Palani G Periasamy, promoter of Appu Hotels, to submit a fresh proposal to corporate creditors, said senior advocate P H Arvindh Pandian, who represented Appu Hotels.

Originally, on an application from the Tourism Finance Corporation of India, the corporate creditor, under the IBC, the NCLT in May 2020 initiated Corporate Insolvency Resolution Process (CIRP) against Appu Hotels. Subsequently, the NCLT gave the nod for Rajagopalan to take over the properties of Appu Hotels for Rs 423 crore in July 2021.

Aggrieved, Periyasamy moved the NCLAT. He contended that as per the valuation report furnished in September 2019, the total value of the assets came to Rs 1,641 crore, which was four times the value proposed in the resolution plan.

He further submitted that the NCLT had failed to interfere with the attempt to acquire the assets of Appu Hotels for less than 25% of its actual value, while the promoters were ready and willing to infuse more funds than Rajagopalan and to settle all the creditors in an expeditious manner.

The existing resolution plan seeks to convert the corporate debtor into a hospital, which will put at risk numerous employees, vendors and other stakeholders, he said. Allowing the appeal, the NCLAT has set aside the order of the NCLT.