The RP had rejected a demand for a forensic audit on the basis that such a resolution failed to garner minimum votes of 66% at the meeting of CoC
Troubled Viceroy Hotels, which runs JW Marriott and The Courtyard in Hyderabad, would be subjected to forensic audit at the insistence of Asset Reconstruction Co (India) Ltd (Arcil). This is likely to push back the resolution of the firm, one of the first prominent hospitality assets that were referred to the National Company Law Tribunal (NCLT) for insolvency proceedings.
The resolution professional had earlier rejected a demand for a forensic audit of the books of the company on the basis that such a resolution failed to garner minimum votes of 66% at the meeting of Committee of Creditors (CoC).
The Hyderabad bench of NCLT has now ruled that the resolution for appointment of a forensic auditor, which got 59.21% of votes, was valid as it needed to be passed with only a minimum vote of 51%.
Asset Reconstruction Co had earlier dragged Viceroy to NCLT under the Insolvency and Bankruptcy Code for dues of Rs 525 crore. It had asked for a forensic audit of several transactions, including investments in Viceroy Hotel Bangalore and disclosures pertaining to corporate guarantees. The Bengaluru property was transferred to Viceroy Bangalore Hotels Pvt Ltd, in which JP Morgan India Property Mauritius II picked up a significant stake.
The ruling marks a victory for Arcil, which has been engaged in a continued tussle with the resolution professional appointed for Viceroy.
A major contentious issue was the inclusion of Mahal Hotel's claims worth Rs 318.67 crore by the resolution professional. Mahal Hotel had given advances to Viceroy to acquire the latter's Chennai hotel property. The deal, inked in 2011, didn't fructify. The property was subsequently sold to Ceebros Hotels for Rs 480 crore.
Arcil had alleged that Mahal Hotel was hurriedly included among financial creditors even though its dues were operational in nature and that it was done with a purpose to bring down Arcil's voting share in the CoC to below 50%.
The resolution professional, on his part, has denied the charges including the allegation that he was trying to avoid forensic audit with frivolous reasons.
The delay was more due to Arcil's change in the stance, he claimed.
While Arcil had earlier demanded an audit of some specific transactions, it later started insisting that a comprehensive forensic audit of books spread over five years be taken up.
NOW CLEAR
- The RP had rejected a demand for a forensic audit on the basis that such a resolution failed to garner minimum votes of 66% at the meeting of CoC
- NCLT has now ruled that the resolution, which got 59.21% of votes, was valid as it needed to be passed with only a minimum vote of 51%
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