The Hyderabad bench of the National Company Law Tribunal (NCLT) has initiated corporate insolvency proceedings against GVK Power & Infrastructure (GPIL) in response to a petition by ICICI Bank and joined by five other banks seeking recovery of about Rs 18,000 crore of dues from the company.
ICICI Bank had petitioned the court in November 2020 to pursue the recovery of its $1.35 billion lent through its Dubai, Bahrain and Singapore branches along with 3 other lenders. Court documents show GPIL owes more than $2.6 billion in loans and corporate guarantees issued by lenders, mainly from foreign branches.
Besides ICICI, the other creditors to the company, mentioned in the order, are Bank of Baroda (Ras Al Khaimah branch), Bank of India (London branch), Canara Bank (London branch), ICICI Bank (Bahrain, Dubai and OBU branches), Indian Overseas Bank (large corporate branch, India) and Axis Bank.
In its 82-page order the court said GPIL has acknowledged its liabilities in its annual reports for fiscals 2019, 2020 and 2021 and ICICI filed its petition when the corporate guarantee was invoked and could not repay the liabilities despite repeated assurances. It also dismissed GPIL’s contention that the NCLT has no jurisdiction on the issue because the loans were mostly given from foreign branches.
The company’s shares lost 5% of its value and ended at Rs 10 apiece on BSE near its lower circuit. The court has appointed Satish Kumar Gupta as the interim resolution professional on the recommendation of ICICI. Gupta has earlier experience as the resolution professional of the erstwhile Essar Steel.
Bankers said the admission of the insolvency against the company increases the chances of recovery from the company. “Though the assets on ground do not match the amount of loans given to the company, there is a possibility of a one-time settlement and also some value in the assets left in the company,” said a banker aware of the details.
The latest annual report shows that the company has one gas-based and one hydro power project, namely the 464 MW GVK Gautami Power and the 330 MW Alaknanda Hydro Power besides the GVK Jaipur Expressway as assets.
Source: Economic Times