Essar Power (Jharkhand), an Essar Group firm, has been admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings. However, unlike in the case of Essar Steel, Ruias did not offer any objection to the admission on a petition filed by ICICI Bank under Section 7 of the Insolvency and Bankruptcy Code (IBC). Failing to recover Rs 3,033.29 crore in debt from the company, a 100% subsidiary of Essar Power, the private-sector lender dragged it to the insolvency court, which said the “advancement of loan and default stand admitted”. According to ICICI Bank, the total amount in default (including interests and other charges) was Rs 3,468.29 crore as on December 15, 2017.
“We are satisfied that a default has occurred and the application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional (IRP). Thus, the application warrant admission,” NCLT’s principal bench led by its president Justice MM Kumar said in a recent order. The bench also accepted the appointment of Huzefa Fakhri Sitabkhan as the IRP, who will have the liberty to approach the tribunal seeking appropriate order in case he faces difficulty in managing the affairs of the company. According to the Insolvency and Bankruptcy Code, 2016, upon admission, the board of the company is suspended and IRP is responsible for the daily management of the company. The IRP has to come up with a resolution plan within 180 days, extendable by another 90 days, of the admission of the petition. If the account is not resolved, the firm goes into liquidation.
Essar Power (Jharkhand) was incorporated in 2005. Its registered office is located in Delhi. The company planned to put up 2X600 MW coal-based thermal power plant at Tori in Jharkhand in the first phase and another 600 MW in the second phase. The company ran into trouble since the cancellation of two allocated coal mines in August 2014. Essar Power Jharkhand’s 2014 annual report notes that the company had signed three PPAs — two with Bihar State Electricity Board and one with Noida Power — aggregating 990 MW. These PPAs were scheduled to be operational between April 2014 and October 2015, but the company said it sought for an extension due to regulatory delays and de-allocation of the coal blocks.