Court Sanctions Scheme of Arrangement for Demerger: Eros Resorts & Hotels

The court granted sanction to the Scheme of Arrangement under Sections 391 and 394 read with Section 100 of the Companies Act, 1956, between Eros Resorts and Hotels Limited (demerged company) and Eros Grand Resorts & Hotels Private Limited (resulting company). The Scheme involves the demerger of Hotel Holiday Inn to promote independent growth. Approvals were obtained from the Board of Directors, secured and unsecured creditors, and the Regional Director, with no objections raised. The court approved the Scheme, allowing the merger of the Demerged Undertaking into the resulting company, and ordered the petitioners to pay costs for record examination.

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Issues:
1. Sanction of the Scheme of Arrangement under Sections 391(2) and 394 read with Section 100 of the Companies Act, 1956.

Analysis:
The judgment pertains to a joint petition filed seeking the sanction of a Scheme of Arrangement between two companies, namely Eros Resorts and Hotels Limited (demerged company) and Eros Grand Resorts & Hotels Private Limited (resulting company). The registered offices of both companies are in New Delhi. The demerged company was initially incorporated in 2006 and later changed its name. The resulting company was also incorporated in 2006. The Scheme involves the demerger of the Hotel Holiday Inn into the resulting company to promote independent growth and benefit stakeholders. The share exchange ratio is detailed in the Scheme, and it is noted that no pending proceedings under specific sections of the Companies Act, 1956 exist against either company.

The Board of Directors of both companies approved the Scheme, and prior applications were made to dispense with certain statutory requirements for shareholder and creditor meetings. The meetings of secured and unsecured creditors of the demerged company unanimously approved the Scheme. Following compliance with notice and publication requirements, the Regional Director did not raise objections to the Scheme. No objections were received from any other party. Considering the approvals received and the absence of objections, the court granted sanction to the Scheme under Sections 391 and 394 read with Section 100 of the Companies Act, 1956. The demerged company's Demerged Undertaking will merge into the resulting company effective from the appointed date of Arrangement. The judgment also addresses the payment of costs by the petitioners for the examination of records, with the petition being allowed on specified terms.

In conclusion, the judgment approves the Scheme of Arrangement between the two companies, highlighting compliance with statutory requirements, approvals from shareholders and creditors, absence of objections, and the effective merger of the Demerged Undertaking into the resulting company.

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