Leela-Brookfield deal: Conclude probe in two weeks, NCLT directs Sebi

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Mumbai | Updated: July 9, 2019 7:53:05 AM

The NCLT has adjourned hearing on the case to July 25.

Sebi, nclat, hotel leela, sale of Leelaventure hotels, Brookfield, ITC, Life Insurance Corporation of India, nclt, bankruptcy code, Hotel Leelaventure, itcA postal ballot notice seeking shareholders’ approval to this sale was also issued, with the voting period ending on April 24.

The National Company Law Tribunal (NCLT) on Monday directed the Securities and Exchange Board of India (Sebi) to wrap up its investigations into the proposed sale of Hotel Leelaventure’s various undertakings to Brookfield in about two weeks, during a hearing on the bankruptcy case against Hotel Leelaventure initiated by JM Financial Asset Reconstruction.

This was after the counsel representing the regulator intimated the tribunal that it will take up to three months to complete ongoing investigations of the proposed sale of Hotel Leelaventure’s various undertakings to Brookfield, based on complaints it received from minority shareholders ITC and Life Insurance Corporation of India (LIC).

The NCLT has adjourned hearing on the case to July 25.

During the proceedings, Ashish Pyasi of Dhir & Dhir Associates, counsel to Hotel Leelaventure, argued that Sebi had been directed by the NCLT to complete its examination of ITC’s complaint by July 8, but the regulator had not done so, having been provided information by Hotel Leela and JM Financial Asset Reconstruction Company.

The counsel further said in view of the injunction, the deal with Brookfield is stalled and cannot be acted upon, further suggesting that hearing be deferred because of these “peculiar circumstances”.

In an exchange notice dated March 18, Hotel Leela informed it has entered into a binding agreement with a Brookfield Asset Management (Brookfield)-sponsored private real estate fund to sell by way of slump sale, four hotels the Leela Group owns. They are located in Bengaluru, Chennai, Delhi and Udaipur. The property it owns in Agra was subject to approval of shareholders, lenders and other regulatory, statutory approvals.

A postal ballot notice seeking shareholders’ approval to this sale was also issued, with the voting period ending on April 24.

According to a letter to Hotel Leelaventure, Sebi had already sought comments from the company on alleged violation of provisions pertaining to related-party transactions.

The regulator’s directions came within hours of an ITC petition in the NCLT against Hotel Leelaventure, alleging suppression and mismanagement of minority shareholders.

ITC’s petition objected to the Brookfield transaction, alleging it would leave Hotel Leelaventure a mere shell with only liabilities while allowing promoters to benefit while leaving minority shareholders holding worthless shares with no underlying business or assets.

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