-CB Edit Desk
The iconic Le Meridien hotel at Guindy in Chennai is set to change hands. The Chennai branch of the National Company Law Tribunal (NCLT) cleared a proposal by MK Rajagopalan, Managing Director of MGM Healthcare, to take over Appu Hotels, which runs the hotel, as reported by MoneyControl.
Appu Hotels owns and operates Le Meridien in Chennai and Coimbatore. The Rs 423-crore bid to take over Appu Hotels was approved by NCLT and it gave its verdict in an insolvency petition filed against the hospitality company by Tourism Finance Corporation of India Limited (TFCIL). The petition was filed last year. Moneycontrol had reviewed a copy of the NCLAT order.
Lender’s okay plan
The committee of creditors (CoC), which besides TFCIL had State Bank of India, Indian Bank, and IDBI, among others, had earlier approved the resolution plan submitted by Rajagopalan. The CoC cleared the proposal with 87.39% voting in favour of it. The CoC cleared Rajagopalan’s proposal in January this year.
The resolution plan envisaged by Rajagopalan provided for an infusion of Rs. 423 crore into the hotel. He also proposed to pay 100% dues of secured and unsecured financial creditors. As per admitted claims, the dues of secured financial creditors was Rs 340.43 crore and that of unsecured financial creditors Rs 49.13 crore, respectively.
Breakup of dues
However, Rajagopalan’s plan does not propose to pay dues of the unsecured financial creditors and operational creditors which are related parties to the erstwhile promoter of Appu Hotels. The admitted claims of related unsecured financial creditors was Rs 45 crore and that of related operational creditors was Rs 2.37 crore.
The plan proposes to pay Rs 1.87 crore to trade creditors and Rs 2.79 crore towards employee/workmen dues. It has also allocated Rs 3.86 crore towards statutory claims, though no claim was received from any statutory authority. The plan also set aside Rs 2.90 crore for the insolvency process cost and Rs 22.02 towards two contingency funds to meet any expenses incurred after approval of the plan.
Rajagopalan has mobilised Rs 150 crore, according to people aware of the matter. He had already tied up with a nationalised bank for the remaining funds, they said asking not to be named. The NCLT order reiterated that the commercial wisdom of CoC could not be disputed, and threw out a slew of submissions against the the resolution plan proposed by Rajagopalan.
Le Meridian was promoted by Palani Periasamy, a non-resident Indian. He along with his friends promoted Dharani Sugars and Chemicals in the 1980s when the governments—both central and state—encouraged the setting up of more sugar mills in the private sector.
MG Ramachandran (MGR) was heading the AIADMK government in Tamil Nadu then. When the five-star hotel was all set for launch in the early 2000, the overseas hotel chain partner all of a sudden backtracked, and Periasamy quickly swung into action to sign up with Le Meridien, which for the first time extended its luxury brand, Royal, for the Chennai hotel.