Debenture holders have moved the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against GVK Power and Infrastructure, the ultimate holding company of GVK, claiming the holding company had guaranteed repayment of funds worth ₹312 crore provided to group companies, according to sources briefed on the matter.
The debenture holders are Edelweiss group firms who are claiming the GVK holding company should cover defaults in repayment of the funds by the group companies or face insolvency for their actions. NCLT has not admitted the petition, which was filed by Catalyst Trusteeship, a trustee acting on behalf of Edelweiss. The lawsuit will be heard on November 10.
The much scaled down Hyderabad-headquartered GVK has interests in thermal power, coal and highways. It has exited its valuable airports business. It once owned the Bengaluru and Mumbai airports. GVK Power and Infrastructure has eight subsidiaries and 11 step-down subsidiaries.
The ultimate holding company derives revenues by providing operation and maintenance services to projects being developed by the group. It also offers consultancy services. “We would like to clarify that there is no debenture outstanding either in the books of GVK Power & Infrastructure Limited (GVKPIL) or any of its subsidiaries,” a GVK spokesperson said in response to ET’s queries. The GVK spokesperson claimed that the debentures were payable by one of the step-down subsidiaries of GVK Power and Infrastructure.
“The debenture in question was payable by one of the step-down subsidiaries of GVKPIL, M/s Alaknanda Hydropower Company Limited (AHPCL). The said debenture was secured among other things by a pledge of over 40% of the shares of AHPCL. Thereafter, a settlement agreement was entered into between the parties.”
“We are also surprised to note that the trustee of debenture holders, M/s Catalyst, has moved to NCLT despite being aware of all the facts,” the spokesperson said.
An executive of Catalyst Trusteeship declined to comment on the matter.
The GVK spokesperson claimed that the security trustee/lender “unilaterally” transferred 40% shares of Alaknanda Hydropower Company, which were given as security for the debentures, to themselves even when the discussions for restructuring the outstanding loan under the settlement agreement was still on.
“As the actions of the security trustee were contrary to the said settlement agreement, the company and its subsidiary had filed a case before Delhi High Court in May 2022. In fact, the company has asked the security trustee for return of the excess shares approximately valued at Rs 523.23 crore, unjustifiably appropriated by the lenders. GVK has written several times to the lender and its trustee for return of such excess shares,” the spokesperson said.
The Delhi High Court case is to be heard on November 28.
Alaknanda Hydropower, which has been running a 330 MW hydro power project since 2016, is a standard asset with the project lenders.
According to the consolidated financial statements of GVK Power and Infrastructure, the company had total borrowings of Rs 10,000 crore for the financial year 2021-22. Short-term borrowings were Rs 7,000 crore while the remainder were long-term borrowings.
