The Hyderabad Bench of National Company Law Tribunal (NCLT) has initiated insolvency proceedings against Lanco Teesta Hydro Power in a petition filed by the company’s lead bank ICICI Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC).
The company failed to repay a loan of Rs 3.13 billion to ICICI Bank after the 500-Mw hydropower project, which was supposed to be commissioned in 2012, remained unfinished. The Teesta Stage-VI Hydro Electric Project was taken up by the firm on build, own, operate, and transfer basis in 2009 in a joint venture with Sikkim government at a cost of Rs 30 billion of which Rs 22 billion was debt.
The debt-laden Lanco Infratech and Lanco Hydro Power are both part of the Lanco group.
In 2014, the lenders provided the facility of corporate debt restructuring after the company sought an extension of commercial operation date by four years due to delays in securing forest clearances among other problems.
With no progress in sight, the banks and other lenders invoked the provisions of strategic debt restructuring (SDR) by acquiring 51 percent controlling stake in the company, while converting a total Rs 6.98 billion loans into equity. As part of this, ICICI Bank has converted Rs 1.98 billion of its loan in equity, leaving an outstanding of Rs 2.17 billion, which subsequently rose to Rs 3.13 billion.
“The facts and circumstances indicate that initiating CIRP (corporate insolvency resolution process) is the only solution permissible under the provisions of the IBC by admitting the case,” the bench said.
The Hyderabad Bench has appointed Huzefa Sitabhkhan as an interim resolution professional (IRP) while directing him to submit a report on actions taken as part of the process on April 18, 2018.
Source: Business-Standard