Sunday 1 April 2018

Insolvency resolution initiates by NCLT for Lanco Teesta Hydro Power

Dear Readers,

REASON FOR PROCEEDINGS - The Company failed to repay project loan dues of about Rs 3.13 billion to ICICI bank after the 500 Mw hydropower project remained unfinished due to various delays

Hyderabad bench of National Company Law Tribunal (NCLT) has initiated the insolvency resolution process for Lanco Teesta Hydro Power Private Limited in a petition filed by the company's lead bank ICICI Bank Limited under section 7 of Insolvency and Bankruptcy Code(IBC).

The company failed to repay project loan dues of about Rs 3.13 billion to ICICI bank after the 500 Mw hydropower project, which was supposed to be commissioned by 2012, remained unfinished due to various delays. The Teesta Stage VI Hydro Electric Project was taken up by the company on build, own, operate and transfer basis way back in 2009 under joint sector with Sikkim government at a cost of Rs 30 billion of which Rs 22 billion was debt.

The debt-laden Lanco Infratech (LITL) and Lanco Hydro Power Limited, both a part of Lanco group, had incorporated this company.

In 2014 the project 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 banks later invoked the provisions of strategic debt restructuring (SDR) by acquiring 51 per cent 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 into equity leaving an outstanding due of Rs 2.17 billion, which was subsequently rose to Rs 3.13 billion.

"The facts and circumstances clearly 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 in its recent orders.

Hyderabad NCLT bench has appointed Huzefa Sitabhkhan as interim resolution professional(IRP) while directing him to submit a report on actions taken as part of the resolution process on April 18, 2018.

For the order Kindly, go through the below link

NCLT_Hyderabad_Order