The resolution professional of Cox & Kings (India) Ltd. moved the National Company Law Tribunal seeking a stay or status quo to prevent the sale of the insolvent tour operator's U.K. assets by two of its subsidiaries.
The counsel for the resolution professional said the two subsidiaries— Prometheon Enterprises Ltd. and Meininger Hotels—were facing judicial proceedings in the U.K. And he cited difficulty in ascertaining if the proceeds of the sale will come to Cox & Kings.
This comes after the newly appointed auditors of the company found that the erstwhile auditor of Cox & Kings used allegedly forged financials of Prometheon Enterprises Ltd. in the consolidated financial statement for 2018-19 in India. The subsidiary's financials, according to a filing today, were not signed by Raffingers—the auditor to the U.K. arm.
Suspended directors of the tour and travel company, in a meeting with Joint Lenders' Forum in June, had proposed the sale of the hotel assets of the U.K. arms to pare debt. They then said that the assets were cumulatively worth more than £130 million.
But in October, the Mumbai bench of the NCLT admitted an insolvency application against the tour operator filed by non-bank lender Rattan India Finance Ltd. after Cox & Kings defaulted on its debt. The tribunal then appointed Ashutosh Agarwala as the resolution professional.
Key Arguments
What Resolution Professional Said
Counsel for the resolution professional sought an urgent stay or status quo order on the sale of hotel assets in the U.K. He argued:
- It was necessary that the tribunal was made aware of the progress in sale of assets by the U.K. subsidiary. There was a difficulty in ascertaining whether the sale proceeds would enure to Cox & Kings.
- Auditor of the U.K. arm declared that the emails relied upon by the erstwhile auditors were not sent from its email IDs. Audited statements of the U.K. subsidiary, which were used for preparing the consolidated financials in India, were not signed by them.
- The resolution professional is not being informed about the progress of sale of assets in the U.K.
Counsel representing the suspended directors informed the tribunal that the resolution professional must expedite the communication with the firm handling the U.K. subsidiary's asset sale to secure the interest of Cox & Kings. And he said the suspended directors too have filed a complaint against the alleged forgery.
The NCLT will hear the matter on Tuesday.
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