Lenders of Mumbai's Rajesh Lifespaces are utilizing corporate and personal guarantees by promoters to recover dues while awaiting NCLT approval for the company's hotel business sale. Promoters and entities linked to Rajesh Lifespaces offered guarantees for insolvent hospitality division loans. Led by ICICI Bank, banks are using these guarantees for better recovery as they await NCLT's nod. NCLT delay adds challenges to the promising recovery. The outcome not only impacts recovery rates but also Mumbai's hospitality and real estate sectors.
Lenders to Mumbai-based Rajesh Lifespaces have initiated the process of recovering their outstanding dues by leveraging the corporate and personal guarantees provided by the company's promoters. This action comes as they await approval from the National Company Law Tribunal (NCLT) for the sale of the firm's hotel business.
The promoters of Rajesh Lifespaces, including Rajesh Patel, Harish Patel, and Priyal Patel, along with companies Rajesh Hospitality, Rajesh Lifespaces, and Rajesh Investments, had extended guarantees for loans taken by the insolvent hospitality division of the company. Leading this effort, banks, led by ICICI Bank, are now invoking these guarantees and related assets to enhance the prospects of recovering their dues.
The guarantor entities possess valuable commercial properties in Mumbai's Andheri region. Leveraging their role as guarantors, the banks are exploring options to initiate a fresh recovery process, either through the NCLT or outside it, to facilitate debt retrieval.
Rajesh Business & Leisure Hotels holds debts amounting to more than ?2,621 crore owed to lenders, primarily ICICI Bank. In March, lenders unanimously favoured a proposal by the Rare Asset Reconstruction Co and the Naman Group consortium to acquire the insolvent hotel business in Mumbai. This consortium had presented an upfront cash offer of ?2,461 crore, coupled with an additional ?231 crore in equity, translating to a 74% recovery rate for lenders, excluding the equity potential.
Although the proposed recovery appears promising, lenders suggest that the potential for retrieval could be even higher, given the assets linked to the companies that furnished corporate guarantees. However, the NCLT's approval for the transaction has been delayed by nearly six months.
The extended delay in securing NCLT approval has created a challenge for lenders, as they navigate the complexities of asset recovery amid regulatory processes. The strategic move to invoke personal and corporate guarantees reflects lenders' commitment to securing their dues and maximizing the recovery process.
As the situation unfolds, stakeholders are closely watching the progress of the recovery efforts and the eventual resolution of the company's insolvency proceedings. The outcome will determine not only the recovery rates for lenders but also the broader implications for the hospitality and real estate sectors in Mumbai and beyond.
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