The National Company Law Tribunal (NCLT) has partially accepted the request made by the suspended promoters of Hotel Horizon, ruling that the claim from asset reconstruction firm Phoenix ARC is invalid due to being barred by the statute of limitations.
Hotel Horizon’s primary asset is a valuable 1.85-acre plot located in Juhu, Mumbai, with a view of the Arabian Sea.
Last month, a consortium comprising Oberoi Realty, Shree Naman Developers, and JM Financial Properties received the committee of creditors’ (CoC) approval to acquire the company through the corporate insolvency resolution process (CIRP).
The CoC has approved a resolution plan that entails a total settlement of ₹919 crore, with the resolution professional (RP) issuing a formal letter of intent.
In its recent order on July 17, the tribunal stated that the debts claimed by Phoenix ARC, which had obtained the loan from IDFC Bank, were time-barred and could not be classified as financial debt under the Insolvency and Bankruptcy Code (IBC).
The tribunal also directed the RP to reassess the claim made by JM Financial Asset Reconstruction Company (JMFARC), taking into account a refund of a ₹14 crore processing fee and interest that ICICI Bank had originally agreed upon.
This development comes after a challenge from Sagar and Vishal Sharma, the suspended directors of Hotel Horizon, who requested the removal of four creditors—Union Bank of India, ACRE, JMFARC, and Phoenix ARC—from the CoC, claiming their debts were inflated, fictitious, and time-barred.
While the petition to remove UBI, ACRE, and JMFARC from the CoC was denied, the NCLT mandated the RP to reevaluate Union Bank of India’s admitted claims, including interest rates and charges, in light of new agreements that may override the initial loan terms.
Legal counsel Akash Agarwal, along with Pulkit Sharma and Rohan Agrawal, represented the promoters of Hotel Horizon.
The NCLT affirmed that the debts owed to Union Bank of India, ACRE, and JMFARC were not barred by the statute of limitations due to ongoing acknowledgments of liability from the corporate debtor through various communications and settlement proposals.
In contrast, Phoenix ARC’s claim, previously dismissed as time-barred by the National Company Law Appellate Tribunal (NCLAT) in 2020, could not be revisited. The NCLT maintained that, absent a stay from the Supreme Court, the NCLAT’s ruling remains enforceable.
Furthermore, the tribunal clarified that additional interest, liquidated damages, and interest on overdue amounts are considered financial debts, emphasizing that these charges are closely tied to lending practices and risk assessment.
Meanwhile, CFM ARC, which purchased the debt from Phoenix ARC, has lodged an appeal with the NCLAT seeking a stay on the ruling.
