SevenHills Healthcare RP seeks fresh resolution plans

The resolution professional (RP) for SevenHills Healthcare on Friday sought fresh resolution plans for the company, which operates multi-speciality hospitals in Mumbai and Visakhapatnam. The call for fresh bids follows the Supreme Court (SC) striking down an order which would have allowed the then co-chairman of UAE’s NMC Health B R Shetty to take over the company.

The corporate insolvency resolution process (CIRP) against SevenHills was approved in April 2018. Creditors to the company have made claims worth Rs 1,591 crore, of which claims to the tune of Rs 1,357 crore were admitted. The largest financial creditor to the company is JM Financial Asset Reconstruction Company (ARC), which has admitted claims worth Rs 976 crore. The ARC had bought out the loan exposures of Axis Bank, Canara Bank, Bank of Maharashtra and the erstwhile Allahabad Bank, State Bank of Travancore and State Bank of Patiala. Other creditors include Union Bank of India, with admitted claims of Rs 95 crore and State Bank of India (SBI), with admitted claims of Rs 80 crore.

On November 15, 2019, SC had set aside an order by the Hyderabad bench of the National Company Law Tribunal (NCLT) approving the resolution plan submitted by Shetty’s New Medical Centre (SNMC). The resolution plan projected infusion of over Rs 1,000 crore by SNMC. That amount was to be borrowed. The plan envisaged paying off financial creditors to the extent of 78.07% and operational creditors to the extent of 75%.

In its order, the apex court upheld the arguments of the Municipal Corporation of Greater Mumbai (MCGM). The municipal corporation had initially approved the resolution plan. It later changed its stance while the case was being heard at the Hyderabad tribunal and sought to be reclassified as a financial debtor. MCGM contended that the company’s 1500-bed hospital in Marol, Mumbai had not been completed by the stipulated date and arrears of lease rentals had mounted.

The SC bench comprising justices Arun Mishra, Vineet Saran and S Ravindra Bhat wrote: “…the authorities under the Code could not have precluded the control that MCGM undoubtedly has, under law, to deal with its properties and the land in question­ which undeniably are public properties.The resolution plan, therefore, would be a serious impediment to MCGM’s independent plans to ensure that public health amenities are developed in the manner it chooses, and for which fresh approval under the MMC Act may be forthcoming for a separate scheme formulated by that corporation (MCGM).”

In February 2020, Shetty stepped down as co-chairman of NMC after charges of financial wrongdoing surfaced against him. Earlier this month, he accused Bank of Baroda (BoB) and Federal Bank of colluding with former executives of his group of companies to embezzle funds, according to a report by Mint.