(Business Line)
National Company Law Tribunal’s Hyderabad bench has permitted insolvency proceedings to be initiated against GVK Energy, following a petition filed by lender IDBI Bank.
GVK Energy, a subsidiary of GVK Power & Infrastructure, was corporate guarantor for debt incurred by GVK Power for a thermal power project in the Punjab.
As part of a consortium, IDBI had extended term loan of around ₹734 crore and working capital of ₹154 crore to GVK Power, which defaulted in repaying the loan and in 2018 the account was declared a non-performing asset.
In 2022, another lender Axis Bank had initiated insolvency proceedings against the corporate debtor. Under a resolution plan IDBI received ₹306 crore against admitted claims of ₹1,413 crore. With the remaining ₹1,107 crore still pending, IDBI exercised its right to recover it from the guarantor, despite the resolution of main borrower.
In its ruling the NCLT said that the default exceeded the minimum threshold of ₹1 crore and that the Insolvency and Bankruptcy Code provided for the initiation of bankruptcy proceedings against a corporate guarantor.
The court dismissed the company’s claims that with GVK Power’s resolution plan going through the debt had been extinguished.
NCLT named Venkata Chalam Varanasi as the interim resolution professional.
