NCLAT Puts Coastal Energen Resolution Plan on Hold Amidst Allegations of Irregularities
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, amidst allegations of irregularities in the bidding process.
NclatCoastal EnergenAdani PowerDickey Alternative Investment TrustInsolvency And Bankruptcy CodeReal EstateSep 07, 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.
Also See Adani Power acquires yet another energy company through CIRP
Frequently Asked Questions
What is the status of the resolution plan for Coastal Energen?
The implementation of the resolution plan has been stayed by the NCLAT amidst allegations of irregularities in the bidding process.
Who are the parties involved in the resolution plan?
The parties involved are Dickey Alternative Investment Trust (DAIT), Adani Power, and ex-promoter AR Buhari.
What are the allegations against Adani Power?
Adani Power is alleged to have piggy-backed Dickey Alternate Investment Trust to get a back-door entry into the bidding process after its expression of interest was rejected.
What is the amount proposed in the resolution plan?
The resolution plan proposes an upfront payment of Rs. 3335.52 crores, excluding CIRP costs, within 60 days from the date of approval.
What is the next hearing date in the case?
The next hearing is scheduled for September 18, 2024.
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