The Supreme Court of India’s intervention in the one-time settlement (OTS) process involving Delhi’s Hyatt Regency hotel has brought renewed attention to the manner in which large corporate debts are being settled, particularly in cases involving public funds.
The apex court recently sought documents and details related to the Hyatt Regency loan settlement, including valuation reports, original bank records and information on outstanding dues. The move has raised broader questions about whether adequate scrutiny is being exercised in similar debt resolution cases.
The Hyatt Regency hotel, located in Delhi’s Bhikaji Cama Place, had accumulated loans from six banks. After facing difficulties in repaying the debt, the hotel proposed a one-time settlement with lenders. According to records cited in the case, two separate valuations conducted in 2021 had assessed the property at Rs 2,600 crore and Rs 2,651.39 crore, respectively.
However, during the OTS process, the hotel’s value was reportedly estimated between Rs 750 crore and Rs 865 crore, significantly lower than the earlier valuations. The matter reached the Supreme Court, which sought to examine whether the settlement value was justified and whether due procedures had been followed before the debt resolution was finalised.
The court’s scrutiny has drawn comparisons with another high-value settlement involving the government-owned National Asset Reconstruction Company Limited (NARCL). In that case, NARCL was tasked with recovering approximately Rs 2,172 crore from AGSON Global Private Limited, promoted by businessman Apres Garg.
However, the debt was settled for Rs 579 crore. The settlement has triggered questions from critics who argue that the gap between the outstanding amount and the settlement value warrants closer examination, particularly because public-sector institutions are involved.
One of the key concerns being raised is whether NARCL explored competitive bidding or a price discovery process before approving the settlement. Financial experts often view open bidding as a mechanism that can help maximise recoveries by allowing multiple interested parties to submit offers.
Critics argue that if such a process had been undertaken, the recovery value could potentially have been higher. Supporters of the settlement, however, may contend that asset reconstruction and debt recovery decisions are influenced by multiple factors, including asset quality, market conditions and the likelihood of recovery.
The contrasting approaches have sparked debate over transparency and accountability in large debt settlements. With the Supreme Court examining valuation and procedural issues in the Hyatt Regency matter, attention is now focused on whether similar standards of scrutiny should apply to other major settlements involving public money and stressed assets.
