Allahabad High Court denied interim relief to power sector’s plea against National Court of Law Tribunal (NCLT) proceedings. So now the financial institutions can initiate bankruptcy proceedings against these companies.
Power sector companies account for nearly ₹1 lakh crore of the NPAs. And as per the RBI circular issued on Feb 12, the last date for finalizing resolution plans ended yesterday. According to the circular since power sector did not finalize on the resolution, they will have to face bankruptcy proceedings. The power sector companies chose to submit a plea at the Allahabad High Court instead.
SAMADHAN scheme
Meanwhile a consortium of banks led by SBI came up with the SAMADHAN (Scheme of Asset Management and Debt Change Structure) scheme with power companies. Banks identified 11 power plants that were either complete or were nearing completion. Then these assets were categorized under sustainable debt and unsustainable debt (which will be later converted to equity). Some of them include Lanco Infratech’s Anpara power plant, Jaypee Power Ventures’ Nigrie power plant and KSK Mahanadi plant.
Power sector companies
Close to 60 companies have been identifies as loan defaulters in the power sector. These include Bombay Rayon, Gitanjali Gems, Gayatri Projects, Patel Engineering, Gammon India, GTL Infrastructure, Punj Lloyd, Reliance Defence & Engineering, Bajaj Hindusthan, Pratibha Industries, and McNally Bharat Engineering Co.
SBI is currently resolving 7 to 8 power sector loans while Bank of India is resolving 5-7 loans.
This are the third set of NCLT proceedings. First batch consisted of 12 corporate defaulters and second consisted of 30 corporate defaulters. With the IBC proceedings initiated promoters will lose control over the company’s assets. After which an interim resolution professional (RP) will be appointed to draw a resolution plan in 270 days to avoid liquidation.