Resolution Plan for Leo Meridian Infrastructure Projects & Hotels Ltd Approved by NCLT Hyderabad, Concluding CIRP - 2025-03-11

NCLT Hyderabad Greenlights Resolution Plan for Leo Meridian Hotels, Marking CIRP Conclusion

Hyderabad, India – In a significant development for the insolvency resolution of Leo Meridian Infrastructure Projects & Hotels Ltd , the National Company Law Tribunal (NCLT) Hyderabad Bench, presided over by Hon’ble Members Shri Rajeev Bhardwaj (Judicial) and Shri Sanjay Puri (Technical), has approved the resolution plan submitted by Jalavihar Entertainment Private Limited Consortium ( JEPLConsortium ). This decision, pronounced on February 25, 2025, effectively concludes the Corporate Insolvency Resolution Process (CIRP) initiated against the hotel and infrastructure company.

Case Background and Resolution Plan Approval (IA(IBC)(Plan)/01/2025)

The CIRP commenced in April 2019 following a petition filed by Andhra Bank (now Union Bank of India) under Section 7 of the Insolvency and Bankruptcy Code (IBC). After numerous challenges and procedural complexities, the Committee of Creditors (CoC) finally approved the resolution plan proposed by JEPLConsortium with a unanimous 100% voting share.

The approved resolution plan, valued at ₹237 Crore, outlines payouts to various stakeholders, with a significant portion allocated to secured financial creditors. The plan also includes provisions for operational creditors, employees, and government dues. Notably, the plan earmarks ₹90 Crore for fund infusion into Leo Meridian for working capital and capital expenditure, signaling a potential revival of the company's operations under new management.

The NCLT bench, after reviewing the plan, affirmed its compliance with Section 30(2) of the IBC and related regulations. Citing precedents like K. Sashidhar v. Indian Overseas Bank and Essar Steel , the Tribunal emphasized the limited scope of judicial review in resolution plan approvals, primarily focusing on procedural and statutory compliance rather than commercial wisdom. The order makes the resolution plan binding on all stakeholders, extinguishing all prior liabilities not included in the plan.

Dismissal of Enhanced Lease Rental Claim (IA(IBC)/235/2025)

In a related matter, the NCLT dismissed an application (IA(IBC)/235/2025) by Atchut Institute of Excellence, seeking enhanced lease rentals for premises occupied by Leo Meridian as staff quarters. Atchut Institute claimed outstanding dues based on a larger occupied area than stipulated in subsequent lease agreements entered into during the CIRP.

The Tribunal sided with the Resolution Professional's contention that the claim was unsubstantiated and contradicted existing lease agreements where payments had been consistently made for a smaller area. The NCLT observed that the claim was raised belatedly and seemed intended to obstruct the advanced stage of the resolution process. Furthermore, the Tribunal imposed a cost of ₹5 Lakhs on Atchut Institute , payable to the Prime Minister’s Relief Fund, underscoring its disapproval of delaying tactics in CIRP.

Rejection of Employee Remuneration Claim as CIRP Cost (IA(IBC)/1897/2024)

The Tribunal partly allowed an application (IA(IBC)/1897/2024) filed by Mr. Giri Tornala , who claimed to be an employee seeking pending remuneration as CIRP cost. While Mr. Tornala asserted employee status and claimed unpaid dues since February 2020, the Resolution Professional argued he was engaged as a consultant without proper documentation.

The NCLT, upon reviewing a letter of engagement, determined Mr. Tornala was indeed a consultant and not an employee. Consequently, his claim for remuneration as CIRP cost was denied. However, acknowledging that Mr. Tornala had provided some legal services during the CIRP, the Tribunal directed the Resolution Professional to make a one-time payment of ₹25,000 for services rendered.

Dismissal of Property Ownership Claim (IA(IBC)/351/2025)

Another application (IA(IBC)/351/2025) by Vanaja Khadi & Village Industries Development Association, seeking to exclude a property from Leo Meridian 's assets based on a prior sale deed, was also dismissed. Vanaja Khadi alleged fraudulent double registration of the property in favor of Leo Meridian .

The NCLT noted discrepancies in property boundaries between the sale deeds presented by the applicant and the Corporate Debtor. The Tribunal clarified that determination of property title falls outside its summary jurisdiction, especially with ongoing litigation in other courts concerning the matter. While dismissing the plea to declare the sale deed in favor of Leo Meridian as void, the NCLT acknowledged pending litigations regarding the property title.

Conclusion

The series of orders passed by the NCLT Hyderabad Bench on February 25, 2025, represents a significant step forward in the resolution of Leo Meridian Infrastructure Projects & Hotels Ltd . The approval of the resolution plan paves the way for a fresh start for the company under new ownership, while the dismissal of other applications indicates the Tribunal's resolve to maintain the integrity and timely progression of the CIRP process under the IBC framework.