Luxury hospitality chain Hotel Leelaventure on Feruary 26 said that its debt owner JM Financial Asset Reconstruction Company (JMFARC) has filed an application with the National Company Law Tribunal (NCLT) against it.
The application field before the Mumbai bench is under section 7 of the Insolvency and Bankruptcy Code 2016, said a statement sent to the stock exchanges.
“The company has been evaluating various options for a viable restructuring including sale of non core asset, sale of hotel, equity infusion and debt refinancing by investors. The company expects the restructuring to include certain waiver in interest and repayment terms (sic)”, said the company in its last announcement on its debt situation in August, 2018.
“We further wish to inform that the company is continuing to engage with prospective investors for a resolution”, said the company.
The Mumbai-based hotel chain has been desperately trying to sell some of its marquee properties in order to cut down its ballooning debt of Rs 6,000 crore as of December 2018.
In June 2018, the board of Hotel Leela had approved an enabling provision to issue up to 125 crore equity shares in one or more tranches to JMFARC. This proposal was not approved in the annual general meeting held in August 2018 as it would have led to the lender holding 75 percent equity of the company.
The names of several investors including private equity companies have been surfacing since past many quarters about a likely investment in Hotel Leela. However the troubled company has repeatedly failed to reach a settlement.
The company has defaulted on its quarterly interest payments to Life Insurance Corporation (LIC) over redeemable and secured non convertible debentures (NCD).
Hotel Leela Venture had said its operating cash flows were not sufficient to service its term loans and NCDs, with the funds of the company currently escrowed and monitored with its lenders.
Hotel Leela owns and manages properties spread out in Bangalore, Chennai, Gurgaon, Mumbai New Delhi, Goa, Kovalam and Udaipur.
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