14 September 2019: The National Company Law Tribunal has allowed Axis Bank to start bankruptcy proceedings against Lanco Amarkantak Power after it defaulted on a .`960 crore loan, court documents reviewed by ETshow.
The power producer had sought to quash proceedings, claiming Axis Bank had initiated them as per Reserve Bank of India guidelines of February 12, 2018, which were invalidated by Supreme Court. Turning down the company’s appeal, the tribunal noted, “The (Insolvency and Bankruptcy) Code will override RBI circulars issued under the banking regulation act.” The tribunal appointed KPMG’s Saurabh Tikmani as interim resolution professional to run the company during bankruptcy process.
RBI had authorised banks last year to initiate insolvency proceedings against companies within 30 days of loan defaults. Those guidelines have been replaced by a more ‘borrower-friendly’ regime that allows banks six months to resolve stressed accounts before going to bankruptcy court.
Lanco Amarkantak Power has generation facilities near the pilgrim town of Amarkantak in Madhya Pradesh. The 600 MW plant uses coal as the primary fuel. An additional 1,320 MW of capacity is under construction.
The company owes banks almost Rs 12,000 crore. Attempts to resolve the default under previous schemes such as corporate debt restructuring have failed.The tribunal had ordered liquidation of Lanco group parent, Lanco Infratech, last year after banks failed to agree on a resolution plan for the company during its insolvency proceedings. The parent company alone owes banks in excess of Rs 45,000 crore. Other Lanco companies undergoing insolvency include Lanco Kondapalli Power and Lanco Solar.