Appellate tribunal NCLAT has rejected SBI’s pleas opposing the liquidation value of ITPCL provided by the debt-ridden firm’s lead banker PNB and said the country’s largest lender cannot “wriggle out” the debt restructuring process of the IL&FS group’s thermal power company.
The National Company Law Appellate Tribunal (NCLAT) has dismissed all three applications moved by SBI and said it does “not find any error in fixing the liquidation value as of 30.09.2018” of IL&FS Tamil Nadu Power Company Ltd (ITPCL).
The appellate tribunal observed that as per the RBI circular, an Inter-Creditor Agreement has been entered between the lenders.
Moreover, over 90 per cent lenders by value and 75 per cent by numbers have already approved ITPCL restructuring plan.
The lenders of ITPCL “with the requisite majority has already taken a decision to approve restructuring plan, the SBI, who is also one of the lenders, cannot be permitted to wriggle out of the terms of the ITPCL restructuring plan”.
“… as per decision taken by the majority, prescribed in Clause 10 of the RBI Circular, the Restructuring Plan and the Liquidation Value taken therein is binding on the Applicant (SBI),” said NCLAT in its order passed earlier this month.
The RBI Circular mandates that Inter-Creditor Agreement has been entered between the parties, according to which any decision agreed by lenders with 75 per cent by value of total outstanding credit facilities and 60 per cent of lenders by number, shall be binding upon all the lenders.
ITPCL is an SPV (special purpose vehicle) incorporated by IL&FS to set up a 3,180 MW thermal power plant in Cuddalore District of Tamil Nadu. It currently has 1,200 MW (2×600 MW) operational. The project is being implemented in phases. Second phase shall have 3×660 MW.
The State Bank of India (SBI), which owns a minority/small part of around Rs 9,000 crore debt being restructured, had opposed the liquidation value obtained by PNB, saying that it was based as on October 15, whereas, it was to be calculated as on March 31, 2023.
The liquidation value provided by PNB was “five years old” and is of no use for it for taking a commercial decision on the implementation of the Restructuring Plan and is also “not in accordance with law”, SBI had submitted.
SBI had requested NCLAT to direct PNB and ITPCL to calculate and provide liquidation value as on the date of execution of the Master Restructuring Agreement and to stay further distribution of fund and payout as per the approved restructuring plan.
However, SBI’s plea was rejected by a two-member NCLAT bench which said: “The Liquidation Value as on 30.09.2018 is as per order dated 12.03.2020 where this Tribunal has accepted 15.10.2018 as the cut-off, we do not find any error in fixing the Liquidation Value as on 30.09.2018.”
PNB has appointed two firms and both had submitted two different valuations of Rs 4,580.03 crore and Rs 6,188.66 crore, following which it has appointed a third valuer as per the rule and regulations.
“The valuers’ report was received by the lead bank (PNB) and thereafter third valuer was engaged due to difference in the valuation by the valuers and all the process was noticed and discussed in the joint lenders meeting. There is no dispute that liquidation value as per the valuers’ report submitted by lead bank has been communicated to the applicant,” said the NCLAT order passed earlier this month.
During the proceedings counsel for PNB and ITPCL had submitted based on the Liquidation Value, in the event SBI clarifies its stand, SBI’s share would be Rs 373.97 crore. SBI can still provide its ‘consent’ or ‘dissent’ to get entitlement as per the terms of the ITPCL Restructuring Plan.
Claims to the extent of Rs 555.57 crore from SBI was accepted by the Claims Management Advisor.
ITPCL has been categorised as an “amber” company. As per the road map for IL&FS, its group companies have been categorised into three categories — green, amber and red — based on their respective financial positions.
Companies under the green category are those that continue to meet their payment obligations.
IL&FS has a total of 302 entities of which 169 are domestic and the rest 133 are offshore. It had a debt burden of Rs 94,000 crore.
