NCLT clears ₹423-crore bid to take over Appu Lodges

MGM Healthcare MD’s plan calls for payment of 100% of debts from secured and unsecured creditors

The National Company Law Tribunal (NCLT), Chennai, has approved MGM Healthcare, Managing Director MK Rajagopalan’s ₹ 423 billion offer to acquire Appu Hotels Limited. Appu Hotels owns and operates Le Meridien in Chennai and Coimbatore.

In 2020, the NCLT had filed for bankruptcy against Appu Hotels in a case filed by Tourism Finance Corporation of India Limited.

The plan is to pay 100% of the contributions from secured and unsecured financial creditors. According to recognized claims, secured financial creditors had claims of ₹ 340.43 billion and unsecured financial creditors ₹ 49.13 billion.

However, it does not suggest paying any fees from unsecured financial creditors and business creditors affiliated with Appu Hotels’ former promoter. The eligible claims of affiliated unsecured financial creditors were 45 billion and affiliated operating creditors were 2.37 billion.

The plan also provides for payments of 1.87 billion to trade creditors and ₹ 2.79 billion in employee / worker contributions. It has also allocated 3.86 billion for legal claims, although claims have not been received from any legal authority.

The plan also provides 2.90 billion yen for bankruptcy litigation costs and 22.02 billion yen for two emergency funds to cover all emergency costs incurred after the plan is approved.

Mr Rajagopalan has mobilized 150 crore and for the remaining ₹ 273 crore, according to legal records, he has already committed to funding from one of the nationalized banks.