The Mumbai bench of the National Company Law Tribunal admitted an insolvency application against Cox & Kings Ltd. after the tour operator defaulted on its debt obligations.
The travel firm's financial creditor—Ratan India Finance Pvt. Ltd.—had dragged it to the tribunal after a default on repayment of the loan extended to it under a credit facility.
Noting that Cox & Kings had accepted the liability and default, the tribunal allowed the insolvency application and appointed Alok Kumar Agarwal as the interim resolution professional for the insolvency resolution process of the company.
The tour operator has been facing financial headwinds since the beginning of this year. It had defaulted on payment of commercial papers worth Rs 150 crore in June due to cash-flow mismatch issues. It had also entered into an inter-creditor agreement for a standstill period of 180 days with lenders which held around 90 percent of its debt.
Reasons For Allowing The Insolvency Plea
Ratan India had approved loans to the tune of Rs 70 crore to Cox & Kings in May and June this year. Out of this, Rs 30 crore was disbursed by the financial creditor at an interest of 13.5 percent per annum with a maturity date of Aug. 31. The loans were secured by guarantee deeds extended by the tour operator towards the financial creditor.
Ratan India had recalled its loan facility as Cox & Kings defaulted on repaying an instalment on the loan amounting to Rs 2.50 crore, which was due for repayment in June. The financial creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code to recover the amount lent to the tour and travel company.
The tribunal, while allowing the application, has imposed a moratorium on institution of suits or continuation of pending suits against Cox & Kings with effect from Oct. 22. It has directed the interim resolution professional to make a public announcement of the corporate insolvency resolution process against the company.
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