Kameneni Steel to face liquidation, says NCLAT

stainless steel factory India

The National Company Law Appellate Tribunal (NCLAT) ordered liquidation of Kameneni Power and Steel India Private Limited (KSPL).

Committee of Creditors (CoC)

These lenders include Oriental Bank of Commerce, Allahabad Bank, Indian Overseas Bank, Central Bank of India, Andhra Bank, Bank of Maharashtra, Karur Vysya Bank and JM Financial Asset Reconstruction Company. The consortium of lenders is lead by Indian Overseas Bank (IOB).

Resolution Plan

The lenders appointed SBI Capital Markets to study the resolution plan proposed by the company. This plan stated infusion of ₹150 cr into the stressed asset. It was disapproved by lenders. So a revised plan that included a one time settlement of ₹525 cr was presented in October last year.

This plan was approved by 66.67% of the lenders (Indian Bank, JM Financial, Allahabad Bank, Andhra Bank and Oriental Bank of Commerce). 26.97% voted against it and the remaining lender with 6.36% share was open to the offer.

NCLT approved plan

NCLT approved the revised plan and ordered to set it in motion. But IOB challenged the appellate tribunal in November last year. It stated that a 75% approval was not achieved for the resolution plan. And the company must be liquidated.

A resolution plan can be initiated with 66% in favor. However this criteria depends on the  lender’s share of the outstanding debt.

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