NCLT admits ICICI Bank's insolvency plea against GVK Power & Infra
This story was originally published at 18:36 IST on 16 July 2024
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NEW DELHI – The Hyderabad bench of the National Company Law Tribunal has admitted a petition by ICICI Bank Ltd to start insolvency proceedings against GVK Power & Infrastructure Ltd, which gave the corporate guarantee for repayment of loan facilities availed by GVK Coal Developers (Singapore) Pte Ltd. The tribunal appointed Satish Kumar Gupta as the interim resolution professional of GVK Power & Infrastructure.
The tribunal ordered a moratorium against GVK Power under Section 14 of the Insolvency and Bankruptcy Code, 2016. There will be prohibition on the institution of suits or continuation of pending suits or proceedings against GVK Power including execution of any judgement, decree or order in any court of law, said the tribunal.
In 2011, ICICI Bank along with a syndicate of three other lenders, Bank of Baroda, Bank of India and Canara Bank, had sanctioned a term loan facility of $1 bln and a letter credit facility of $35 mln to GVK Coal Developers for acquiring coal mines in Australia. GVK Power hypothecated its account and further pledged its certain shareholdings in GVK Energy Pvt Ltd and GVK Transportation Pvt Ltd as security for the loan facilities availed by GVK Coal Developers.
In 2014, ICICI Bank, Bank of India, Canara Bank, Bank of Baroda and Indian Overseas Bank sanctioned a term loan facility of $44 mln to GVK Coal Developers, which was increased to $250 mln. GVK Power and GVK Natural Resources Pvt Ltd had also provided corporate guarantee for the repayment of that loan facility. Thereafter, the accounts of GVK Coal developers were classified as non-performing assets around 2016-17 (Apr-Mar).
As a result of non-payment of the loan amount, the lenders filed claims in a London court for an amount of $707.9 mln and $148 mln. Later in 2020, ICICI Bank had invoked corporate guarantee by issuing a notice to GVK Power and others demanding a sum of $531 mln and $89.10 mln. In its reply, GVK Power showed its inability to honour the payments.
As of June 2022, GVK Power was liable to pay $855.89 mln to the bank. Consequently, the bank moved the tribunal to start insolvency proceedings against GVK Power. While the insolvency case was going on, the London court allowed the lenders' claim in October. Therein, GVK Power and others were held liable to pay principal amount of $1.1 bln and interest of $1.06 bln. The tribunal had also noted the London court's decree in its order.
Today, shares of GVK Power & Infrastructure Ltd ended 5.0% lower at 9.63 rupees on the National Stock Exchange, while those of ICICI Bank ended 0.8% higher at 1,239.90 rupees.
Reported by Surya Tripathi
Edited by Tanima Banerjee
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