Probe into ITC, Leela Hotels: NCLT asks Sebi to conclude investigations

Probe into ITC, Leela Hotels: NCLT asks Sebi to conclude investigations

The National Company Law Tribunal on Tuesday directed the Securities and Exchange Board of India to wrap up its investigations into the proposed sale of Hotel Leelaventure’s various undertakings to Brookfield by July 8, during a hearing on bankruptcy case against Hotel Leelaventure initiated by JM Financial Asset Reconstruction At Tuesday’s hearing, Hotel Leelaventure requested that the hearing be adjourned for four months in light of Sebi’s ongoing investigations of the proposed sale of company’s various undertakings to Brookfield based on complaints it received from minority shareholders ITC and Life Insurance Corporation of India (LIC).

In an interim order, the two-member Mumbai bench directed that Hotel Leelaventure also serve a copy of its order to the Sebi while granting adjournment until July 8.

In an exchange notice dated March 18, Hotel Leela Venture 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 owned Leela hotels located at Bengaluru, Chennai, Delhi and Udaipur and the property that it owns in Agra, subject to approval of shareholders, lenders and other regulatory, statutory approvals.

A Postal Ballot Notice seeking shareholder approval to this sale was also issued with voting period ending April 24.

As gleaned from a Sebi 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 NCLT against Hotel Leelaventure, alleging suppression and mismanagementof 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.