Whalesbook
Creditors of Rajesh Business & Leisure Hotels will bear the brunt of the company's financial problems following the National Company Law Tribunal's (NCLT) approval of a ₹730 crore resolution plan. While the plan offers closure, it means creditors will recover only about 54% of the admitted liabilities, resulting in a haircut exceeding 65%.
The NCLT cleared the acquisition of Rajesh Business & Leisure Hotels by a consortium of Rare Asset Reconstruction Company (Rare ARC) and Check-Inn Hotels, a unit of Shree Naman Group. The approved resolution plan values the business at ₹730 crore, significantly less than the over ₹1,345 crore in admitted liabilities. Secured financial creditors are set to receive ₹461 crore in full and final settlement. This large discount reflects the typical outcomes in resolving distressed assets, where recovered values often fall far below the original debt.
The resolution process began in April 2022 after ICICI Bank filed a petition over a ₹311 crore default. It involved several reviews, including rejections and remands by the NCLT and National Company Law Appellate Tribunal (NCLAT). The NCLT Mumbai bench finally approved the plan on April 24, 2026, with unanimous backing from the Committee of Creditors (CoC).
The recovery rate of about 54% for admitted liabilities (₹730 crore plan vs. ₹1,345 crore liabilities) is consistent with recent trends under India's Insolvency and Bankruptcy Code (IBC). Overall recovery rates under the IBC have recently been around 30-33%, with creditors often taking haircuts of up to 70% on their claims.
The consortium acquiring Rajesh Hotels combines Rare ARC, an Asset Reconstruction Company, with Shree Naman Group, a real estate developer. Rare ARC reported revenues of ₹84.4 crore in FY25, and Shree Naman Group had revenues between ₹100-500 crore in FY24. This pairing aims for financial restructuring through the ARC and operational revival by the developer.
Shree Naman Developers has prior experience with NCLT acquisitions, including Radius Infra Holdings, where it settled debt and added working capital. However, the group has also faced scrutiny over its debt servicing. The acquisition targets a distressed hospitality asset, a sector frequently seeing insolvencies due to existing debt and operating costs.
The significant creditor haircut means a write-off exceeding ₹615 crore on admitted liabilities. The resolution process was lengthy, involving earlier rejections and remands due to procedural issues. Such delays can increase claims with accumulated interest and costs, further reducing recovery amounts. Although Shree Naman Group's involvement is intended to revive the hotel assets, the group has a history of delays in servicing its own debts.
The hospitality sector, despite recent recovery signs, is also vulnerable to economic pressures and competition, which could affect the acquired properties' future earnings. The Rajesh Business & Leisure Hotels deal reflects ongoing consolidation in India's distressed hospitality market. Asset Reconstruction Companies and real estate developers are actively using the NCLT framework to buy struggling properties, often at steep discounts. This trend points to a steady flow of similar deals, fueled by the need for investment and operational improvements to revive stressed assets. The success of this acquisition will depend on the acquirers' management and development of the properties. The outcome for creditors highlights the substantial financial compromises often required in insolvency cases.