Real Estate
NCLAT Puts Coastal Energen Resolution Plan on Hold Amidst Allegations of Irregularities
By GeoSquare News Desk · Published 2024-09-08
In a significant development, the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has stayed the implementation of the resolution plan for Coastal Energen, a power generation company based in Chennai. The resolution plan, submitted by a consortium of Dickey Alternative Investment Trust (DAIT) and Adani Power, was approved by the National Company Law Tribunal (NCLT) on August 30, 2024.
However, the order was challenged by ex-promoter AR Buhari, who alleged 'glaring irregularities' in the way the resolution plan was approved by the lenders. Buhari contended that Adani Power piggy-backed Dickey Alternate Investment Trust to get a back-door entry into the bidding process after Adani's expression of interest (EoI) was rejected by the resolution professional (RP) for delayed submission.
The NCLT order was also criticized for allowing DAIT, which did not meet the minimum financial and experience requirements stipulated in the bidding documents, to participate in the bidding process. This raised compliance concerns and cast doubts on the transparency of their bid.
It is worth noting that former promoter of Coastal Energen, AR Buhari, has been arrested by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA), 2002, in a case of overvaluation of coal prices.
The resolution plan proposed an upfront payment of Rs. 3335.52 crores, excluding CIRP costs, within 60 days from the date of approval. Of this amount, DAIT would contribute Rs 1,700 crores and Adani Power would contribute Rs 1,630.88 crore. Financial creditors would receive Rs 3,335 crore, which is 28.52% of their total claim of Rs 11,678 crore. Operational creditors would receive a sum of Rs 4.64 crore. A sum of Rs 109 crore has been set aside as CIRP cost.
The NCLAT has ordered status quo until the next hearing on September 18, 2024.
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