The National Company Law Tribunal (NCLT) Mumbai has admitted an application filed by Bank of India to initiate the Corporate Insolvency Resolution Process (CIRP) against Neurostar Hospital Private Limited. The application was submitted under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, following a default on financial debt amounting to approximately ₹28.51 crore.
Background of the Case
Bank of India, acting as the financial creditor, extended credit facilities to Neurostar Hospital, including a term loan of ₹20.45 crore sanctioned in 2020 and a working capital term loan of ₹5.85 crore under a government scheme in 2022. These loans were secured through various agreements such as hypothecation, mortgage deeds, guarantees, and promissory notes.
Default and Legal Proceedings
The hospital defaulted on its repayment obligations on February 28, 2023, leading to the account being classified as a Non-Performing Asset (NPA) on May 29, 2023. Despite the issuance of a demand notice under the SARFAESI Act, 2002, the dues remained unpaid. The financial creditor provided evidence of the debt and default, including loan agreements, disbursement records, and acknowledgment of debt by the hospital.
Tribunal’s Findings and Orders
The Tribunal examined the documents and noted that at the admission stage under Section 7, its role is limited to verifying the existence of financial debt and default, without delving into disputes or the debtor’s financial condition. Based on the evidence, the Tribunal found the application complete and admitted it.
Consequently, the Tribunal ordered the initiation of CIRP against Neurostar Hospital and declared a moratorium under Section 14 of the IBC. An Interim Resolution Professional (IRP) was appointed to manage the process, make public announcements, invite claims, and submit reports to the Tribunal. The financial creditor was directed to deposit an initial amount of ₹3 lakh towards CIRP costs, which will be treated as interim finance.
Security and Loan Details
- The loans were secured by hypothecation of plant and machinery, equitable mortgage of the hospital building and associated properties in Pune, and guarantees.
- The term loan was to be repaid in 110 installments starting nine months after the first disbursement, with a total tenure of 119 months.
- The working capital term loan under the government scheme was to be repaid in 36 installments commencing January 31, 2024.
Next Steps
The CIRP process will proceed under the supervision of the appointed IRP, who will oversee the resolution efforts. The Tribunal’s detailed order has been uploaded on the NCLT portal.
For more updates on insolvency proceedings and related legal developments, stay tuned to our site.
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