The UAE-based First Step Ventures is set to take over Frontier Lifeline Private Ltd, after its ₹75-crore resolution plan was approved by a division bench of the National Bench of the Company Law Tribunal (NCLT), Chennai.
Promoted by senior cardiac surgeon K.M. Cherian, the company runs the 100-bed Frontier Lifeline Hospital in Chennai. The hospital and Dr. K.M. Cherian Heart Foundation also promoted the 360-acre Medical Science Park, Frontier Mediville, at Elavur village in Tiruvallur district. It was the first medical research park in the country, and also a medical special economic zone (SEZ).
The commencement of the proceedings under the Insolvency and Bankruptcy Code, 2016, was initiated against the company by the State Bank of India and Bank of Baroda. The petition claimed that the company had defaulted the payment of about ₹79.93 crore to SBI and ₹78.30 crore to Bank of Baroda, as on November 17, 2017. The National Company Law Appellate Tribunal, New Delhi, had granted liberty to consider First Step’s resolution plan as a scheme under Section 230 of the Companies Act, 2013, after NCLT ordered the liquidation of Frontier Lifeline.
Section 230 of the Companies Act is a mechanism to ensure institutional settlement of disputes between creditors and the company. It ensures that the company has a chance to save itself from insolvency or liquidation by doing a deal with at least a majority of creditors.
S. Rajagopal, who was appointed the liquidator, had filed an application under Section 230 of the Companies Act for convening meetings of both secured and unsecured creditors of the company to consider First Step’s plan.
NCLT ordered the convening of the meeting of both the secured and unsecured creditors, but noted that the committee of lenders was the ultimate authority to take a call in the management and affairs of the company, once it comes under the corporate insolvency resolution process, and the shareholders will not come into the picture, since they do not have economic interest in the company.
In the meeting, 97.58% of the secured creditors and 96.10% of the unsecured creditors of Frontier Lifeline Private Ltd voted in favour of the plan.
First Step will pay ₹75 crore in one shot, settling creditors’ dues as well as meeting the expenses on the corporate insolvency resolution process and liquidation. The NCLT, while approving the plan, directed the liquidator to pay the PF dues immediately. It also appointed the liquidator to continue on the monitoring committee, as provided under the plan.
It also rejected a plea sought by the South Indian Bank, on various grounds, for modification of the plan. One of the key things sought by the bank was to proceed against the promoter/guarantor to recover the money over and above what it received under the scheme.
Attempts to reach out to the hospital for quotes were futile.
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