NCLAT stays implementation of Coastal Energen resolution plan

In a setback to the consortium of Dickey Alternative Investment Trust (DAIT) and Adani Power, the Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has stayed the order of NCLT that approved the resolution plan submitted by the consortium for CIRP of Chennai-based power generation company Coastal Energen. The appellate tribunal has ordered status quo until the next hearing on 18 September 2024.

The Chennai bench of the National Company Law Tribunal (NCLT) had approved the Rs 3,500 crore resolution plan submitted by DAIT and Adani Power on 30 August 2024.

The NCLT order was challenged by ex-promoter AR Buhari, who has alleged ‘glaring irregularities’ in the way the resolution plan was approved by the lenders. The promoter of the power company has contended that Adani Power piggy-backed Dickey Alternate Investment Trust to get a back-door entry into the bidding process after the Adani’s expression of interest (EoI) was rejected by the resolution professional (RP) for delayed submission.

Adani Power initially faced setbacks in the bidding process under the Insolvency and Bankruptcy Code (IBC) during Coastal Energen’s insolvency proceedings. After a late Expression of Interest (EOI) was rejected, Adani Power formed a strategic partnership with Dickey Alternative Investments Trust (DAIT) to re-enter the fray. However, DAIT did not meet the minimum financial and experience requirements stipulated in the bidding documents, raising compliance concerns and casting doubts on the transparency of their bid.

It must be noted here 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 over valuation of coal prices whereby the Public Sector Undertakings paid higher price for the purchase of coal.

The resolution plan by Adani Power consortium has proposed an upfront payment of Rs.3335.52 crores (Excluding CIRP costs amount) within a period 60 days from the date of approval of the Resolution Plan by this Tribunal. Of the Rs 3,335.52 crore, DAIT would contribute Rs 1,700 crores and Adani Power would contribute Rs 1,630.88 crore. As per the resolution plan, financial creditors will receive Rs 3,335 crore, 28.52% of their total claim of 11,678 crore. Operational creditors will receive a sum of Rs 4.64 crore.  

A sum of Rs 109 crore has been set aside as CIRP cost.

Also See: Adani Power acquires yet another energy company through CIRP