NCLT admits Cox & Kings Financial Services for Insolvency Resolution

The dedicated bankruptcy court has admitted the insolvency petition against Cox & Kings Financial Services Limited (CKFSL) and appointed Pardeep Kumar Sethi as interim resolution professional (IRP) for the company.

YES Bank had approached the Mumbai bench of the National Company Law Tribunal (NCLT) after the company defaulted on its dues of over Rs 445 crore.
This is the second listed firm promoted by Ajay Kerkar to be admitted under the Corporate Insolvency Resolution Process (CIRP) since the flagship firm and travel company Cox & Kings Ltd is also going through an insolvency resolution process.
In this case, YES Bank had sanctioned a working capital loan of Rs 350 crore and an additional cash credit facility of Rs 50 crore in October 2018 and March 2019 respectively, where the company’s promoters Ajay Kerkar and Urmila Kerkar, had given a personal guarantee in favour of the lender.
Cox & Kings Financial Services defaulted on August 1, 2019, for the payment of Rs 445.51 crore, which included working capital demand loan, cash credit facility and interest.

“On December 11, 2019, the petitioner (YES Bank) sent an invocation of personal guarantee notice to Ajay Kerkar and Urmila Kerkar. Despite the receipt of the guarantee invocation notice, no payment was made to the petitioner,” said the tribunal in its 13-page order.
The company argued in the tribunal that it shares a common office with Cox & Kings Ltd, another group company, against whom the CIRP process started in November 2020 and its resolution professional has denied access to the company for other documents as well.

Cox & Kings Financial Services was demerged from the parent company Cox & Kings Ltd in 2018. The company is primarily in the business of foreign exchange.
“Having admitted the petition/application, the provisions of the moratorium as prescribed under Section 14 of the code shall be operative henceforth with effect from the date of order and shall be applicable by prohibiting institution of any suit before a court of law, transferring/encumbering any of the assets of the debtor…” said the tribunal presided over by a judicial member Janab Mohammed Ajmal and a technical member Chandra Bhan Singh in its 13-page order of May 7.

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