After Allahabad HC rebuff, power firms look for govt lifeline
Mumbai: About 70 companies with a combined debt of approximately ?3.6-lakh crore face insolvency proceedings, with the deadline imposed by the Reserve Bank of India ending on Monday. These companies did not get any legal relief as the Allahabad High Court declined to stay the RBI’s February circular instructing banks to take all large accounts above ?2,000 crore into bankruptcy if a resolution plan is not agreed upon in 180 days.
The companies, mostly from the power sector, will now be hoping that the government invokes a special provision to intervene and direct the RBI to dilute the order. Companies that are part of Independent Power Producers Association of India, which had filed the plea with the Allahabad High Court, can also pursue legal recourse independently. The other option would be to try and cobble together a resolution plan in the next two weeks as banks have a 15-day window to resolve the stressed assets.
Setback for power companies
Bankers said that 14 assets in the power sector have already been referred to the Bankruptcy Court, but 12 assets have the possibility of being recast. Within this, seven have already found bidders.
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