You are here: Home » News-IANS » Business-Economy
Business Standard

Lenders seek to continue 8 bankruptcy proceedings

IANS  |  New Delhi 

Lenders have decided to file an affidavit in the (NCLT) to continue proceedings against stressed power projects that were referred to the court on the basis of the February 12 circular of the

The RBI circular has been declared ultra vires by the This has also put a question mark on several cases of stressed assets that were referred to the NCLT by the lenders as all earlier proceedings becomes infructuous.

"We are filing an affidavit in the NCLT not to stall proceedings against eight stressed power projects that were referred to the appellate body post the RBI circular. The power projects remain in stress and lenders believe that there is no point to start resolution of these all over again," said a top of a power sector lending institution who did not wish to be named.

Lenders, however, said that they would also wait for the issue of a new circular from the RBI to start resolution of other stressed assets. The resolution of assets has almost stalled after the order as none of the bankers wants to take risk of approving a resolution now for the fear of future vigilance action.

The Supreme Court's April 2 order raised question marks over the fate of about 8 power projects including the 3,600 MW KSK Mahanadi Power Co. Ltd, the 1,920 MW Lanco Amarkantak Power Ltd, the 600 MW Avantha Power (Jhabua), the 1,350 (Nasik), the 550 MW RKM Powergen, and the 700 MW Bharat Utkal.

These projects were referred by a consortium of lenders including the Power Corporation to the NCLT as per the provisions of the February 12 RBI circular, which said that it would be mandatory for projects in default to be referred to the NCLT after 180 days from start of the resolution period. As 180 days for these projects ended in August, they were referred to the NCLT.

Sources said that banks are expected to take recourse to an affidavit also in case of few other stressed assets in sugar and shipping sectors that also got referred to the NCLT and now face uncertainties.

In all about 70 cases with total of about Rs 4 lakh crore were declared as stressful by the banks post RBI circular. This included 34 stressed power projects worth 40,000 MW having total of close to Rs 1.8 lakh crore.

It is not that institutions, including the PFC, did not try to resolve certain power projects, but none of the attempts were successful. In the case of KSK Mahanadi, showed interest but it soon withdrew from the race as lenders were divided on the level of the haircut. In case of an Rs 600 crore one time settlement scheme worked out for Lanco Amravati, the sole investor backed out from the race at the last minute.

With relation to Avantha Power (Jhabua), an Rs 100 crore settlement for the PFC got stalled after one of the operational creditors took the asset to the NCLT. In case of Prayagraj, the resolution has got delayed as the UP power regulator has asked the project to reduce the tariff by 11 paisa. This may change the bid value.

(can be contacted at subhash.n@ians.in)

--IANS

sn/vd

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, April 10 2019. 22:06 IST
RECOMMENDED FOR YOU
RECOMMENDED FOR YOU