NCLAT Sets Aside Insolvency Proceedings Against Hyatt Regency Operator, Accepts Former Promoters’ Proposal

The National Company Law Appellate Tribunal (NCLAT) has overturned insolvency proceedings against Asian Hotels (West), the entity managing Hyatt Regency in Mumbai. The appellate tribunal also greenlit the proposal submitted by the company’s former promoters and directors under Section 12A of the Insolvency & Bankruptcy Code.

Criticizing the lenders’ decision as “arbitrary” for not approving the 12A Proposal, which promised to settle the entire debt with financial and other creditors, NCLAT declared the Corporate Insolvency Resolution Process (CIRP) closed. The order specifically set aside the NCLT’s previous decision on September 16, 2022, admitting the Section 7 application.

Asian Hotels West, initially borrowing from YES Bank, had its debt transferred to JM Financial Asset Reconstruction, later assigned to UV Asset Reconstruction Company Ltd (UVARCL). The two-member NCLAT bench expressed disapproval of UVARCL, noting a claimed amount of Rs 295 crore admitted in the CIRP, in contrast to UVARCL’s proposed total payment of Rs 329.14 crore.

Highlighting concerns over UVARCL’s intentions, the NCLAT stated that UVARCL seemed inclined to take over the prime asset, Hyatt Regency, Mumbai, and transfer it to a Prospective Resolution Applicant known only to UVARCL. The bench emphasized that the 12A proposal by the former promoters adequately addressed dues for all creditors, including operational creditors, employees, workmen, and government dues.