NCLT has directed for the liquidation of debt-ridden Tulip Hotels, as the tribunal failed to receive any bidder during its insolvency resolution process within the prescribed timeline.

Timeline of events

On May 16, 2023, the NCLT had directed the initiation of a Corporate Insolvency Resolution Process (CIRP) against Tulip Hotels over a plea filed by Yes Bank, claiming a default of ₹900 crore for two corporate guarantees issued by it.

Tulip Hotels was a corporate guarantor for two loans disbursed by Yes Bank to Cox & Kings and EzeeGo One Travel and Tours Ltd. After they defaulted, the financial creditor Yes Bank invoked the guarantee of ₹450 crore each given for both loans.

However, the RP of Tulip Hotels submitted that during the prescribed timeline of 180 days, no bids (resolution plan) were submitted for Tulip Hotels during the Corporate Insolvency Resolution Process (CIRP) and the Committee of Creditor (CoC) has also passed no for extension of the period.

Hence, he was left with no other option except to go for liquidation as per the provisions of the Insolvency & Bankruptcy Code (IBC).

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CIRP for Tulip Hotel expired on November 12, 2023, as the IBC mandates it shall be completed within 180 days from the date of admission of the application to initiate the said process.

Upon expiry of the prescribed period, RP has to file an application before the NCLT for extension of the same if instructed to do so by a resolution by the CoC with a 66 per cent vote.

However, J C Flowers Asset Reconstruction Pvt Ltd (JCFARPL), which holds a 70.83 per cent voting share in CoC, in an email dated December 5, 2024, gave a go-ahead to the liquidation process.

The Mumbai bench of the National Company Law Tribunal (NCLT) has admitted the plea filed by the Resolution Professional of Tulip Hotels seeking liquidation of the company on January 16, 2025.

A two-member NCLT bench said after perusal of averments made in the application and email from JCFARPL holding a 70.83 per cent voting share in CoC, it is satisfied and is of the considered opinion it is in consonance with the provisions of IBC.

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“Accordingly, this Authority has left with no option except to pass an order for Liquidation of the Corporate Debtor Company in the manner laid down in Chapter III of the Code considering the fact there is no Resolution Plan for consideration and CoC does not foresee any possibility of getting Plans for the Corporate Debtor,” said NCLT.

The order further said: “The Application be and the same is allowed. The Corporate Debtor, Tulip Hotels Private Limited, shall be liquidated in the manner as laid down in Chapter-III of the Code.” NCLT has also appointed a liquidator to conduct the liquidation process of Tulip Hotels.