Bankruptcy proceedings against Nitin Desai’s company

Desai had objected to the company petition on various grounds, including that though he submitted one-time settlement proposals, those were rejected by the ECL Finance in July 2022. The argument, however, failed to impress upon the Tribunal

Mumbai: On July 25, the Mumbai bench of the National Company Law Tribunal had ordered initiation of Corporate Insolvency Resolution Process (CIRP) against ND’s Art World Pvt Ltd and appointed Jatin Kothari as the interim resolution professional to take over its management and operations and come up with a resolution plan. The order came on a Company Petition filed by Edelweiss Asset Reconstruction Company Ltd after Desai’s company failed to repay loan amount of ₹252 crore.

Navi Mumbai, India - Aug. 2, 2023:Nitin Chandrakant Desai was found dead hanging in his studio, ND Studio at Karjat in Raigad district of Maharashtra State on 02/08/2023. in Navi Mumbai, India, on Wednesday, August 2, 2023. (Photo by Bachchan Kumar/ HT PHOTO) (HT PHOTO)

In November 2016, ND’s Art World, which was incorporated in December 2002 for “organizing maintaining, operating replicas of historical monuments and providing facilities and services related to hotels, theme restaurants, shopping malls and recreation centres,” had obtained a loan of ₹150 crore from ECL Finance Ltd. Nitin Desai, Naina Desai, and a firm, KND Investments and Finance Pvt Ltd , had executed some security documents for availing the loan.

Barely 15 months later, in February 2018, ND’s Art World applied to the finance company for additional loan of ₹35 crore but availed an amount of ₹31 crore only. Because of irregular and delayed payments of the principal instalments and interest, in March 2020, the loan accounts of ND’s Art World were classified as non-performing assets in March 2021.

Desai had objected to the company petition on various grounds, including that though he submitted one-time settlement proposals, those were rejected by the ECL Finance in July 2022. The argument, however, failed to impress upon the Tribunal.

It added that at the same time the lender had successfully proved the existence of “debt” and “default”, apart from other security documents and loan documents and therefore the company petition was allowed.

The Tribunal said that the management of Desai’s firm will be handled by the interim resolution professional and directed the “suspended” directors and employees of the debtor to provide all documents in their possession and furnish every information in their knowledge to the resolution professional.