Cox & Kings Insolvency: IFFCO-Tokio Moves NCLT To Secure Dues
IFFCO-Tokio General Insurance Company Ltd. has moved the National Company Law Tribunal to secure payments made by it under a commercial arrangement on behalf of Cox & Kings (India) Ltd. to third parties.
IFFCO Tokio had entered into a commercial arrangement with Cox & Kings under which it insured certain transactions made by the travel and tour company with third parties.
Last year, Cox & Kings—a member of the International Air Travel Association alliance—collected an amount exceeding Rs 100 crore for certain travel-related services from its customers. IATA, according to the alliance, can act as an intermediary and make payments to member airlines and ticketing companies on behalf of Cox & Kings.
The insurer’s counsel argued that it had paid up to Rs 80 crore apart from certain out-of-pocket expenses on behalf of the tour operator according to their commercial arrangement. The payments, the counsel said, must be treated as “third-party assets”.
This comes after the Mumbai bench of the NCLT had admitted an insolvency application against the tour operator after it defaulted on its debt obligations in October last year. The tribunal had approved the appointment of Ashutosh Agarwala as the resolution professional for the company.
Non-Cooperation By Suspended Directors
The resolution professional for Cox & Kings had moved the NCLT in February to seek direction against the company’s suspended directors and erstwhile auditor to ensure they provide necessary information and statutory records. This, the professional said, was to ascertain the company’s position and ensure smooth implementation of its insolvency proceedings.
The tribunal had passed an order directing the suspended directors and the auditor to share such information within three days. It has now provided an additional seven days for the submission.
The counsel for the resolution professional sought the tribunal’s direction by saying that:
- While the erstwhile auditor has complied with the tribunal’s directions, the suspended directors aren’t cooperating with the resolution professional. Lack of information is hampering the corporate insolvency resolution process.
- Suspended directors are still terminating contracts, collecting funds and acting on behalf of the company.
- They are directing the resolution professional to collect statutory information from former employees of Cox & Kings, despite the law providing them statutory control over such information.
The counsel representing the suspended directors questioned the maintainability of the resolution professional’s move saying that they have provided all necessary information.
The tribunal has granted a week to the suspended directors to comply with its earlier order and will hear the matter next week.