Latest news with #InsolvencyandBankruptcyCode
Mint
14 hours ago
- Business
- Mint
IBC's weak spot: Slow, difficult recovery from dubious pre-bankruptcy deals
New Delhi: Companies on the brink of collapse tend to do certain transactions that benefit the promoters or close partners but are detrimental to the organization and its creditors. While such 'dubious transactions' can later be set aside during bankruptcy proceedings by tribunals, getting the money back is proving an uphill task. Data from regulator Insolvency and Bankruptcy Board of India (IBBI) reviewed by Mint showed that in FY25, just ₹1,322 crore or a tenth of the amount involved in 'avoidance transactions' disposed of by tribunals were recovered. And overall, just 12% of the ₹65,650 crore worth voidable deals executed by promoters and management of 368 companies–and where tribunals have given their verdict–were recovered, according to IBBI. Such deals could include paying off a friendly creditor just before bankruptcy proceedings while ignoring others, moving assets to related parties or hiding them, selling assets for less than they're worth, or taking loans on unfair or excessive terms. Also read | A series of court orders changed bankruptcy rules. Now, the govt is amending the law 'There is often misconduct by earlier management pre-insolvency and it might be a reason for the insolvency in some cases," said Dhananjay Kumar, partner (head-insolvency and restructuring) at law firm Cyril Amarchand Mangaldas. 'Recovery of such amounts is a fundamental function of a law like IBC (Insolvency and Bankruptcy Code)," added Kumar. Other challenges pointed out by Kumar include lack of data to challenge these transactions, lack of funds with resolution professionals, and slow movement in National Company Law Tribunal (NCLT). The matter assumes significance because money recovered from dubious transactions adds to the pool of resources available for a corporate restructure plan. According to IBBI's estimates, on a conservative scale, a decision on avoidance transactions by tribunals would add recovery to creditors by at least 10%. Yogendra Aldak, partner at Lakshmikumaran and Sridharan Attorneys, said the high amounts being flagged as avoidance transactions highlight an alarming trend of promoters deliberately using such transactions 'to deprive a company of its resources for self-serving purposes leading to a snowball effect during times of stress". Read this | Scrapping a key bankruptcy rule may yield faster liquidation, better recovery Further, Aldak said IBC has not been designed as a debt-recovery machine and, instead, prioritises resolution of distressed companies. So, to avoid delays in rescuing businesses, taking decisions on avoidance transactions has been kept independent of corporate debt resolution. However, this makes it hard to recover money from avoidance transactions. For example, only deals made within two years before the insolvency process can be reviewed, which means many questionable transactions are never examined, Aldak explained. Another problem, he said, is tracking the money, as it is often moved through shell companies or hidden in other countries, making recovery even harder. Anisha Jhunjhunwala, senior consultant-IBC at NPV Insolvency Professionals Pvt. Ltd, said that despite clear evidence, enforcing clawbacks from avoidance transactions is a lengthy legal battle, with promoters delaying proceedings through litigation, and tracing diverted assets is complex, especially when routed through layers of related entities or parked overseas. Also read | NCLT member crunch slows down bankruptcy resolution 'The high quantum of flagged transactions reflects serious lapses and, in some cases, wilful misconduct by promoters, particularly during the twilight period before insolvency," said Jhunjhunwala. 'It shows that promoters, anticipating distress, often prioritize asset stripping over stakeholder interest, highlighting the need for stricter pre-insolvency oversight and faster adjudication timelines." The fact that it often takes considerable time for a bankruptcy petition by a creditor to be admitted in a tribunal only allows more time for such unscrupulous activities to take place. Till the end of March 2025, close to 1,200 bankrupt enterprises have been restructured under IBC and their creditors got the chance to recover ₹3.89 trillion or about a third of their admitted claims. This is in addition to proceeds from companies liquidated and the recoveries made by lenders who struck settlement deals with corporate borrowers before tribunals initiated insolvency proceedings. And read | Bankruptcy resolution professionals face creditor fury as cases reach courts
India.com
21 hours ago
- Business
- India.com
Big move by Gautam Adani, acquires this former company of Anil Ambani, its name is…
Adani Power Ltd has moved forward in the process of acquiring the bankrupt Vidarbha Industries Power Ltd. It is a former subsidiary of Anil Ambani led Reliance Power Ltd. The National Company Law Tribunal on 18 June approved Adani Power's Rs 4,000 crore resolution plan to acquire VIPL. A majority nod was given by secured creditors in February. Adani Power will pay Rs 4,000 crore to acquire the company. Vidarbha Industries owns a 600-megawatt thermal power plant in Nagpur. The resolution plan received 100% voting share. The tribunal also found this plan suitable for revival. Vidarbha Industries Power Current Situation The company has admitted liabilities of Rs 6,753 crore, and the successful resolution plan has proposed to pay Rs 4,000 crore to acquire the company. 'We find that the Resolution Plan has been approved with 100% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for the revival of the Corporate Debtor,' said the division bench of judicial member Nilesh Sharma and a technical member, Sameer Kakar, in its 75-page order. 'We also observe that none of the stakeholders in the process of CIRP have come forward before this Tribunal with an application objecting to the approval of this Resolution Plan,' added the tribunal. The tribunal also observed that the resolution plan is binding on the Corporate Debtor (VIPL), its employees, members, creditors, guarantors and other stakeholders. VIPL Anil Ambani Connection VIPL was earlier a subsidiary of Anil Ambani-owned Reliance Power. It declard insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). Reliance Power had announced last year that VIPL was no longer its subsidiary. Bimal Kumar Agarwal was appointed by the bench for the interim resolution professional (IRP) to look after the insolvency process. This also includes managing VIPL's assets and inviting resolution plans.
Mint
a day ago
- Business
- Mint
Adani Power adds Reliance Power's former unit to its string of acquisitions
Next Story Krishna Yadav NCLT has approved Adani Power's ₹ 4,000 crore resolution plan to acquire Vidarbha Industries Power Ltd. Adani Power is looking to increase its power-generating capacity to 30.67 GW by 2030 from 17.55 GW now, making it India's largest private sector capacity expansion. (Reuters) Gift this article Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. The National Company Law Tribunal on 18 June approved Adani Power's ₹ 4,000 crore resolution plan to acquire VIPL following a majority nod in February by the distressed company's committee of creditors. Adani Power aims to increase its 17.55 GW of power-generating capacity—including thermal plants across states and a 40 MW solar project in Gujarat—to 30.67 GW by 2030, making it the largest private sector capacity expansion in the country. With its latest acquisition, Adani Power will gain control of VIPL's 600 MW thermal power plant in Butibori, Nagpur, comprising two 300 MW units. The plant has a long-term power purchase agreement with the Maharashtra government for 308.5 MW, ensuring stable cash flows and potential for future scale-up. The VIPL deal follows Adani's recent acquisitions of Dahanu Power ( ₹ 815 crore), Lanco Amarkantak Power, and Coastal Energen ( ₹ 3,330.88 crore), underscoring the group's strategy to drive growth. On Thursday, 19 June, Adani Power shares fell 3.2% to ₹ 533.20 each on NSE, while the Nifty 50 held steady, shedding just 18.80 points amid geopolitical tensions because of the escalating Israel-Iran conflict. VIPL's insolvency Vidarbha Industries Power was admitted into insolvency in September 2024 after CFM Asset Reconstruction moved the tribunal under the Insolvency and Bankruptcy Code (IBC). On 24 February this year, Adani Power informed stock exchanges that VIPL's lenders had approved its revival plan, subject to the terms of the letter of intent and necessary regulatory approvals. Adani Power had emerged as the successful resolution applicant after a competitive process that attracted bids from several major players, including Capri Global Holdings, CESC Ltd, Hindustan Thermal Projects, Jindal Power, JSW Energy, NTPC Ltd, Orissa Metaliks, Vedanta Ltd, and Shriniwas Spintex Industries. Under the approved plan, Adani Power will pay ₹ 4,000 crore against total admitted liabilities of ₹ 6,753 crore. The Adani entity has been directed to complete the payment within the stipulated timeframe. 'The Resolution Applicant is directed to make payment of the entire Resolution Plan amount within the time period stipulated under the Resolution Plan, failing which the entire amount paid shall stand forfeited," a Mumbai bench of the NCLT said in its 18 June order. As per the plan, the funding will be arranged through internal accruals or financing by eligible affiliates, with the flexibility to raise capital via equity, debt, preference shares, or external commercial borrowings. Reliance Power's exit VIPL was originally established as a special-purpose vehicle by Reliance Power to develop a 600 MW thermal power plant in Butibori, Nagpur, under a concession from the Maharashtra Industrial Development Corporation. The project was later converted into an independent power project. In September 2024, Reliance Power announced that VIPL was no longer its subsidiary after settling ₹ 3,872 crore in corporate guarantees extended on its behalf. As part of the settlement with CFM Asset Reconstruction, all associated obligations were released and 100% of VIPL's shares were pledged in favour of CFM. VIPL had defaulted on loans from Axis Bank and State Bank of India, which were later acquired by CFM ARC. Topics You May Be Interested In Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Mint
a day ago
- Business
- Mint
Adani Power adds Reliance Power's former unit to its string to acquisitions
Adani Power Ltd has inched closer to acquiring the bankrupt Vidarbha Industries Power Ltd, a former subsidiary of Reliance Power Ltd, adding to a list of distressed but strategically located power assets as it strives towards its goal. The National Company Law Tribunal on 18 June approved Adani Power's ₹4,000 crore resolution plan to acquire VIPL following a majority nod in February by the distressed company's committee of creditors. Adani Power aims to increase its 17.55 GW of power-generating capacity—including thermal plants across states and a 40 MW solar project in Gujarat—to 30.67 GW by 2030, making it the largest private sector capacity expansion in the country. With its latest acquisition, Adani Power will gain control of VIPL's 600 MW thermal power plant in Butibori, Nagpur, comprising two 300 MW units. The plant has a long-term power purchase agreement with the Maharashtra government for 308.5 MW, ensuring stable cash flows and potential for future scale-up. The VIPL deal follows Adani's recent acquisitions of Dahanu Power ( ₹815 crore), Lanco Amarkantak Power, and Coastal Energen ( ₹3,330.88 crore), underscoring the group's strategy to drive growth. On Thursday, 19 June, Adani Power shares fell 3.2% to ₹533.20 each on NSE, while the Nifty 50 held steady, shedding just 18.80 points amid geopolitical tensions because of the escalating Israel-Iran conflict. Also read | Adani Group to raise ₹2.5 trillion over five years to fund capex VIPL's insolvency Vidarbha Industries Power was admitted into insolvency in September 2024 after CFM Asset Reconstruction moved the tribunal under the Insolvency and Bankruptcy Code (IBC). On 24 February this year, Adani Power informed stock exchanges that VIPL's lenders had approved its revival plan, subject to the terms of the letter of intent and necessary regulatory approvals. Adani Power had emerged as the successful resolution applicant after a competitive process that attracted bids from several major players, including Capri Global Holdings, CESC Ltd, Hindustan Thermal Projects, Jindal Power, JSW Energy, NTPC Ltd, Orissa Metaliks, Vedanta Ltd, and Shriniwas Spintex Industries. Under the approved plan, Adani Power will pay ₹4,000 crore against total admitted liabilities of ₹6,753 crore. The Adani entity has been directed to complete the payment within the stipulated timeframe. 'The Resolution Applicant is directed to make payment of the entire Resolution Plan amount within the time period stipulated under the Resolution Plan, failing which the entire amount paid shall stand forfeited," a Mumbai bench of the NCLT said in its 18 June order. As per the plan, the funding will be arranged through internal accruals or financing by eligible affiliates, with the flexibility to raise capital via equity, debt, preference shares, or external commercial borrowings. Also read | Adani, Reliance among participants in NPCIL's small nuclear reactor project Reliance Power's exit VIPL was originally established as a special-purpose vehicle by Reliance Power to develop a 600 MW thermal power plant in Butibori, Nagpur, under a concession from the Maharashtra Industrial Development Corporation. The project was later converted into an independent power project. In September 2024, Reliance Power announced that VIPL was no longer its subsidiary after settling ₹3,872 crore in corporate guarantees extended on its behalf. As part of the settlement with CFM Asset Reconstruction, all associated obligations were released and 100% of VIPL's shares were pledged in favour of CFM. VIPL had defaulted on loans from Axis Bank and State Bank of India, which were later acquired by CFM ARC. Also read | Is the Israel-Iran war a billion-dollar threat to Adani Ports & SEZ?
Hans India
2 days ago
- Business
- Hans India
Modi's 11 years: Major feats accompanied big minuses
The assessment of Narendra Modi's 11 years as Prime Minister, however fair and balanced, runs the risk of being disparaged by one ideological camp or the other. Yet, a nuanced and objective analysis of such an important person is imperative, particularly given Modi's significant impact on India's political, economic, and social landscape. One cannot deny that his tenure has seen several notable achievements, particularly in areas like economic management, infrastructure development, national defense, and internal security. From the outset, his administration emphasised fiscal prudence. Despite global headwinds, including the Covid-19 pandemic, the Indian economy has shown resilience. Major economic reforms such as the implementation of the goods and services tax (GST) and the Insolvency and Bankruptcy Code were important structural steps, even if their execution faced challenges. The push for digital payments, particularly through the Unified Payments Interface (UPI), has made India a global leader in fintech innovation. Infrastructure development has also been a cornerstone of Modi's governance. Highways, airports, and railways have seen major expansion, and the electrification of villages has proceeded at an impressive pace. The Gati Shakti initiative aimed at integrating infrastructure planning and execution is one of the more ambitious and strategic moves in recent years. In terms of national defence, Operation Sindoor and earlier surgical strikes in response to cross-border terrorism reflect a more assertive military and diplomatic posture. Modi's government has been keen on portraying India as a rising global power, with a more muscular foreign policy and defense strategy. On internal security, one of the least discussed yet significant achievements of the Modi government have been the near elimination of the Maoist insurgency in central and eastern India. What was once a serious internal security challenge now appears to have been brought under control, thanks in part to coordinated security operations and development initiatives in affected regions. However, the Modi era has also raised serious concerns in several areas critical to a healthy democracy. Press freedom has increasingly come under threat, with India falling in global press freedom rankings. Journalists critical of the government often face intimidation, legal harassment, or worse. The space for dissent has noticeably shrunk, with prominent civil society organizations and activists finding themselves under scrutiny, raids, or incarceration. Individual freedoms and civil liberties have also faced challenges. In Jammu and Kashmir, the abrogation of Article 370 was a significant political move, but the prolonged communications blackout and detentions that followed raised serious questions about democratic norms. Equally troubling has been the apparent weakening of institutions. The autonomy of the Election Commission, judiciary, and investigative agencies like the Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) is being questioned. The agencies like ED and CBI have frequently been accused of targeting Opposition leaders. In conclusion, Modi's tenure as Prime Minister has been a complex and consequential chapter in India's history. His government has made undeniable progress in economic modernization, infrastructure, national security, and internal order. Yet, these gains have come amid concerns over shrinking democratic space, erosion of institutional independence, and constraints on freedoms. Whether history ultimately judges his legacy favorably will depend on which of these competing forces—development or democratic regression—ends up defining the long-term trajectory of the nation. For now, a fair assessment would characterize his record as mixed but remains satisfactory.
