The Hyderabad Bench of the National Company Law Tribunal (NCLT) on Monday ordered the liquidation of Lanco Infratech Limited (LITL), the holding company of the Lanco group, having a consolidated debt of Rs 500 billion.
The Bench has appointed resolution professional (RP) Savan Godiawala as the liquidator and directed him to initiate the liquidation process as prescribed under Chapter-3 of the Insolvency and Bankruptcy Code (IBC), 2016, by following the liquidation process stated in IBBI (liquidation process) Regulation, 2013.
"The liquidator appointed herein is directed to issue public announcement stating that the corporate debtor is in liquidation and also required to send the copy of this order to the concerned Registrar of Companies as required under Section 33(1) of the Code," member (judicial) Ratakonda Murali stated in his orders.
All powers of the board of directors, key managerial personnel and the partners of the corporate debtor will cease to have effect and will be vested in the liquidator, according to the orders. The judge has issued the orders based on an application filed by Godiawala. The RP filed the application seeking liquidation of the company just after the committee of creditors (CoC ) rejected the revised resolution proposal of Thriveni Earth Movers.
The orders coincided with the dismissal of a plea by Vijayawada-based Power Mech Projects Limited, which had filed an interim application pitching for a fresh resolution process in the Lanco case, thus effectively closing any further discussion on resolution.
Citing the changes in the IBC, 2016, Power Mech Projects asked for an opportunity to submit a resolution proposal just before the CoC rejected Thriveni Earth Mover's revised resolution proposal after the Bench had extended the resolution period by 16 days on July 13.
Just after the rejection of Thriveni Earth Movers' revised proposal, Lanco's RP filed for liquidation of the company by the end of the extended resolution period. Thus, Monday's orders effectively upheld the liquidation proposed by the RP.
Lanco Infratech, which has a stand-alone debt of over Rs 100 billion, was taken to the NCLT by IDBI seeking the initiation of the insolvency resolution process last year. Though the straight 270-day resolution period for Lanco Infratech ended on May 3, the subsequent proceedings of the adjudicating authority kept the hopes of a possible resolution alive for a couple of more months.
While the holding company now faces the impending liquidation, its subsidiaries, such as Lanco Amarkantak and Lanco Teesta, were also taken to the NCLT by their lenders. On the other hand, gas power subsidiary Lanco Kondapalli, with close to 1,500-mw capacity, was put up for sale by Axis Bank.
"...Applicant cannot take any aid by virtue of amendment to Section 29 A of the Code through Ordinance 2018. Therefore, the relief prayed by the applicant for exclusion of 163 days from CIRP period cannot be granted and applications liable to be dismissed," the Bench stated in its orders on Power Mech's application, thus bringing down the curtains on Lanco.