Abhilash Lal, the EY-backed resolution professional of the hospital chain, has written to the Municipal Corporation of Greater Mumbai (MCGM) seeking control over the operations and accounts of the facility, said people aware of the development.
JP Morgan Chase-backed SevenHills Healthcare operates 1,500 beds in Mumbai and 303 beds in Visakhapatnam and has been undergoing insolvency proceedings since 2018.
In March 2020, MCGM took over the operations of the Mumbai hospital under the Disaster Management Act and declared it a hospital dedicated to curing Covid patients.
MCGM extended the period for utilizing it for Covid patients until the end of February this year but has not issued any further extension notice thereafter.
In the absence of any notice, the RP is now attempting to find buyers for the hospital and thus would need requisition of the Mumbai hospital currently operated by the civic authority, said one of the persons cited above.
The RP has written to MCGM to hand over the operations of the accounts with effect from April 1 this year. This would also imply that the RP, at the behest of hospital lenders, will determine the day-to-day operations and charges applicable to services. He will also have the discretion to replace MCGM employees’ and agents.The RP has asked MCGM to remove its equipment and staff on or before March 31, failing which it would be liable to ‘pay Rs 1.5 crore per month as demurrage charges,’ said one of the persons cited above.
The resolution of Jitendra Das Maganti-promoted Sevenhills Healthcare suffered a setback on two counts. First, the civic authorities reneged on an agreement to settle dues with the winning bidder, Dr B R Shetty’s New Medical Centre. Second, Shetty went bankrupt after the collapse of NMC Health, then one of the biggest private healthcare companies in the United Arab Emirates.
Presently, lenders have some hope for the resolution of the hospital since the RP received eleven expressions of interest from potential bidders for the hospitals.
Max Healthcare, US-based Princeton Healthcare, Jupiter Hospital, Capri Global and JM Financial Asset Reconstruction Company (ARC) are among the EoI applicants.
The RP, who has admitted Rs 1357 crore claims from financial creditors, did not respond to ET’s request for comment.
The National Company Law Tribunal (NCLT) has approved a Rs 1,000-crore resolution plan by Dr B R Shetty’s New Medical Centre, but MCGM challenged the plan at the National Company Law Appellate Tribunal. The appellate tribunal, too, rejected MCGM’s petition. However, in November 2019, the Supreme Court overturned the tribunal and appellate tribunal’s orders.
MCGM had initially agreed to the successful bidder’s Rs 102-crore settlement offer and a promise to reserve 20% of the beds in the Mumbai hospital for the economically deprived. But later it reneged on the deal, arguing at the top court that it is not bound to accept a resolution plan even if the tribunal approves it because it had issued a notice to terminate the lease agreement before the company was admitted for insolvency.
J M Financial Asset Reconstruction company is the largest lender. Two of alternate investment funds- Bank of America and Broad Peak Investment Advisors have invested in securities receipt of Sevenhills Healthcare issued by JM Financial ARC. Union Bank of India, Central Bank of India and UCO Bank are among other lenders of the hospital.
(With inputs from health)