The National Company Law Tribunal (NCLT) has partially allowed the application filed by the suspended promoters of Hotel Horizon, directing the exclusion of asset reconstruction company Phoenix ARC’s claim from the ongoing corporate insolvency resolution process (CIRP), citing it as barred by limitation.
Hotel Horizon’s key asset is a prime 1.85-acre land parcel in Mumbai’s plush Juhu area, overlooking the Arabian Sea.
Last month, Oberoi Realty in partnership with Shree Naman Developers and JM Financial Properties secured the approval of the committee of creditors (CoC) to acquire the company through the CIRP.
The consortium’s resolution plan, involving a total settlement of Rs 919 crore, was cleared by the CoC, with the resolution professional (RP) issuing a formal letter of intent.
The latest order, passed on July 17, said that the debt claimed by Phoenix ARC, which had acquired the loan from IDFC Bank, was time-barred and could not be considered a financial debt under the Insolvency and Bankruptcy Code (IBC).
The tribunal also instructed the RP to rework the claim admitted for JM Financial Asset Reconstruction Company (JMFARC), factoring in the refund of a Rs 14 crore processing fee and interest, originally agreed upon by ICICI Bank in a credit committee resolution.
The development follows a challenge by Sagar and Vishal Sharma, the suspended directors of Hotel Horizon, who had sought removal of four creditors--Union Bank of India, ACRE, JMFARC and Phoenix ARC--from the CoC, alleging that their claims were inflated, fictitious and time-barred.
While dismissing the request to remove UBI, ACRE and JMFARC from the CoC, the NCLT directed the RP to reverify Union Bank of India’s admitted claims, including applicable interest rates and other levies, considering subsequent agreements that might supersede the original facility agreement.
Akash Agarwal, founder of MAAK Legal, along with counsels Pulkit Sharma and Rohan Agrawal appeared for the promoters of Hotel Horizon.
The tribunal held that debts owed to Union Bank of India, ACRE and JMFARC were not barred by limitation due to continued acknowledgements of liability by the corporate debtor through one-time settlement proposals, balance sheets and communications extending the limitation period.
In contrast, Phoenix ARC’s claim, previously dismissed by the National Company Law Appellate Tribunal (NCLAT) in 2020 for being time-barred, could not be reconsidered. The NCLT held that in the absence of any stay on the NCLAT order by the Supreme Court, it remained binding.
Further, the tribunal clarified that additional interest, liquidated damages and interest on arrears of such damages do constitute financial debt, reinforcing the principle that such charges are intrinsically linked to lending arrangements and risk-based pricing.
Meanwhile, CFM ARC, which acquired the debt from Phoenix ARC, has filed an appeal before the NCLAT seeking a stay in the matter.
Hotel Horizon’s key asset is a prime 1.85-acre land parcel in Mumbai’s plush Juhu area, overlooking the Arabian Sea.
Last month, Oberoi Realty in partnership with Shree Naman Developers and JM Financial Properties secured the approval of the committee of creditors (CoC) to acquire the company through the CIRP.
The consortium’s resolution plan, involving a total settlement of Rs 919 crore, was cleared by the CoC, with the resolution professional (RP) issuing a formal letter of intent.
The latest order, passed on July 17, said that the debt claimed by Phoenix ARC, which had acquired the loan from IDFC Bank, was time-barred and could not be considered a financial debt under the Insolvency and Bankruptcy Code (IBC).
The tribunal also instructed the RP to rework the claim admitted for JM Financial Asset Reconstruction Company (JMFARC), factoring in the refund of a Rs 14 crore processing fee and interest, originally agreed upon by ICICI Bank in a credit committee resolution.
The development follows a challenge by Sagar and Vishal Sharma, the suspended directors of Hotel Horizon, who had sought removal of four creditors--Union Bank of India, ACRE, JMFARC and Phoenix ARC--from the CoC, alleging that their claims were inflated, fictitious and time-barred.
While dismissing the request to remove UBI, ACRE and JMFARC from the CoC, the NCLT directed the RP to reverify Union Bank of India’s admitted claims, including applicable interest rates and other levies, considering subsequent agreements that might supersede the original facility agreement.
Akash Agarwal, founder of MAAK Legal, along with counsels Pulkit Sharma and Rohan Agrawal appeared for the promoters of Hotel Horizon.
The tribunal held that debts owed to Union Bank of India, ACRE and JMFARC were not barred by limitation due to continued acknowledgements of liability by the corporate debtor through one-time settlement proposals, balance sheets and communications extending the limitation period.
In contrast, Phoenix ARC’s claim, previously dismissed by the National Company Law Appellate Tribunal (NCLAT) in 2020 for being time-barred, could not be reconsidered. The NCLT held that in the absence of any stay on the NCLAT order by the Supreme Court, it remained binding.
Further, the tribunal clarified that additional interest, liquidated damages and interest on arrears of such damages do constitute financial debt, reinforcing the principle that such charges are intrinsically linked to lending arrangements and risk-based pricing.
Meanwhile, CFM ARC, which acquired the debt from Phoenix ARC, has filed an appeal before the NCLAT seeking a stay in the matter.
