Image Credit: hyatt.com
Hyatt Regency Mumbai hotel, which had announced its closure on Monday, has reportedly defaulted on term loans taken from Yes Bank. The information was revealed in a regulatory filing made to the stock exchanges. The closure of Mumbai’s renowned 5-star hotel had shocked observers and was a reflection of the crisis facing the hotel industry due to the second wave of the COVID-19 pandemic.
The Hyatt Regency, Mumbai is owned by a Delhi-based company Asian Hotels (West). The regulatory filings of the company revealed that it had taken term loans worth Rs 4.32 crore from Yes Bank. However, Asian Hotels(West) was unable to pay the principal and interest of the same. Among other defaults, the company promoted by Sushil Kumar Gupta also couldn’t pay the EMI of a car loan worth Rs 4 lakh. The company is facing a total debt of Rs 262.54 crore
The default happened on 28 April, about a week before the hotel’s closure was announced. The owner blamed “the massive effect of COVID -19 pandemic on the company, entire hotel industry across the country and globe” for its inability to pay up, according to a clarification it sent to the Bombay Stock Exchange(BSE).
Asian Hotels(West) further revealed that following the default, Yes Bank transferred all its funds including the hotel’s daily income to an escrow account and barred the company from paying any taxes(like GST, VAT, TDS, PF, ESIC, etc.), utility charges, vendor payments and salaries to its staff of more than 300. “Yes Bank has only made some payments from Company’s escrow account, towards the hotel’s electricity, water and gas charges,” it added.
Following the development, the General Manager of the hotel, Hardip Marwah on Monday released a statement saying, “This is to inform all the on-roll staff of the hotel that no funds are forthcoming from Asian Hotels (West) Ltd, the owner of Hyatt Regency Mumbai, to enable payment of salaries or to aid the operations of the hotel.” The statement added that a decision had been taken to suspend the operations of the 5-star hotel for some time period until further notice.
The share price of Asian Hotels (West) on Tuesday fell by 12.95% or Rs 31.25 points to close at Rs 210.05 at the National Stock Exchange.