2 days Ago
Mumbai: Banks led by Union Bank of India are set to put the more than Rs 700 crore debt owed to them by the iconic Sahara Star Hotel on sale, after the National Company Law Appellate Tribunal rejected a plea for initiating insolvency proceedings against the company last month.Banks are looking for buyers for the debt on an all-cash basis and an advertisement seeking initial bids is likely to be published on Saturday, people familiar with the development said.Banks tried to sell the loans to National Asset Reconstruction Company, but the bid given by the government-backed ARC was too low, said a person familiar with the details.
“So, banks have decided to check what is the market price expected on this loan via an open auction. Based on these bids, each bank will decide on what to do next,” he said. “In case bids are at a satisfactory price, an e-auction will be done to find the highest bidder.
ARCs and funds in the distressed asset space are likely to bid in the open process, which will set the benchmark for another auction to finalise the anchor bidder for the hotel property in Mumbai. So, all in all this is still at a very early stage because only when lenders get a go ahead from their managements can we start a meaningful process. There are still differences of opinion among lenders and if the bids received do not meet expectations, then lenders may choose not to go ahead, said the person cited above.
Lead lender Union Bank and process advisor BoB Capital Markets did not reply to emails seeking comment till press time Friday.Union Bank is the lead lender accounting for more than half of the company’s debt. UCO Bank, IDBI Bank and Bank of Baroda are other major lenders with around Rs 50 crore each.
This account has been under stress for more than five years. In 2021, banks had tried to restructure the debt, but it did not go through. In 2024, an operational creditor had successfully admitted it for insolvency in the NCLT (National Company Law Tribunal) but in appeal that was overturned last month, said another person aware of the details.
“Banks are hence trying to find an alternative route for recovery.”The Sahara Group had acquired the hotel at Vile Parle, close to the Mumbai domestic airport, in 2002. The five-star hotel consists of over 400 rooms with five full-service restaurants and six banquet halls that can handle an event for nearly 4,500 people at a time.
In November last year, the NCLT accepted KTR Management Services’ petition to initiate insolvency proceedings against the hotel company over dues of close to Rs 11 crore for supply of manpower. However, a three-judge bench of the appellate tribunal overturned that order on March 21 this year, holding that since there was a pre-existing dispute between Sahara and KTR going back to July 2019, the demand notice issued by the operational creditor to recover its dues was not valid..
