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The National Company Law Tribunal (NCLT) has ordered the liquidation of Tulip Hotels after it failed to secure a resolution plan during the Corporate Insolvency Resolution Process (CIRP), initiated by Yes Bank over an INR 900 crore default. Despite the statutory 180-day timeline, no bids were received, and the Committee of Creditors (CoC), led by J C Flowers Asset Reconstruction with a 70.83% voting share, opted against an extension. The Mumbai NCLT bench approved the liquidation on January 16, 2025, appointing a liquidator to oversee the process in compliance with the Insolvency and Bankruptcy Code (IBC) guidelines.
The National Company Law Tribunal (NCLT) has ordered the liquidation of Tulip Hotels after the failure to secure a resolution plan within the stipulated timeline during the Corporate Insolvency Resolution Process (CIRP). Initiated on May 16, 2023, based on a plea by Yes Bank, the CIRP was launched due to a default of INR 900 crore. The default arose from corporate guarantees issued by Tulip Hotels for loans amounting to INR 450 crore each, disbursed by Yes Bank to Cox & Kings and EzeeGo One Travel and Tours Ltd. When the borrowers defaulted, Yes Bank invoked the guarantees. Advertisement
Despite the statutory 180-day timeframe mandated by the Insolvency and Bankruptcy Code (IBC), no bids or resolution plans were submitted for Tulip Hotels. The Committee of Creditors (CoC), which includes J C Flowers Asset Reconstruction Pvt Ltd (JCFARPL) holding a majority voting share of 70.83%, opted not to extend the CIRP period. Consequently, the resolution professional (RP) filed for liquidation, as required by IBC provisions.
The CIRP timeline for Tulip Hotels expired on November 12, 2023. Under IBC, any extension requires approval by at least 66% of the CoC. However, on December 5, 2024, JCFARPL indicated via email that liquidation should proceed, leaving no room for further attempts at resolution.
On January 16, 2025, the Mumbai bench of NCLT, comprising a two-member panel, approved the RP's application for liquidation. After reviewing the application and the CoC's decision, the tribunal determined that liquidation aligned with IBC guidelines. The bench concluded that, in the absence of any viable resolution plan and the CoC's rejection of an extension, liquidation was the only option.
In its order, NCLT emphasized that liquidation must be conducted according to Chapter III of the IBC. The tribunal appointed a liquidator to oversee the process and ensure compliance with the code's provisions.
This decision marks the end of the insolvency process for Tulip Hotels, a corporate debtor unable to find a resolution plan or attract bids within the prescribed timeframe. It underscores the challenges faced in resolving cases involving significant financial defaults and highlights the role of creditors in determining the outcome under the IBC framework. Tulip Hotels will now be liquidated as per the procedures set forth in the code, bringing the insolvency proceedings to a close and paving the way for asset distribution among creditors.
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