Adani Power's resolution plan for Essar Power unit gets NCLT approval

The dedicated bankruptcy court has approved the resolution plan submitted by Adani Power Ltd for the revival of Essar Power’s unit Essar Power Mahan Project Ltd (EPMPL). The company owns a 1,200 MW thermal power plant in the Singrauli district of Madhya Pradesh.

The approved resolution plan provides for payment of Rs 2,500 crore as against the admitted claim of financial and operational creditors to the tune of Rs 12,067 crore. The consortium of financial lenders approved Adani Power’s resolution plan unanimously.

“In the absence of any tenable objection made against the resolution and keeping note that the resolution plan is passed by 100% vote of CoC (committee of creditors). Therefore, this bench finds no impediment in allowing the resolution plan,” said a bench presided by Bhaskara Pantula Mohan and Hemant Kumar Sarangi.

“The monitoring committee shall be set up and shall take necessary steps for the implementation of the plan,” observed the tribunal in its 49-page order of November 1.

The company was admitted for the resolution process on September 29, 2020, in a petition filed by its creditor ICICI Bank. On May 11, 2021, the resolution professional (RP) of the company submitted the plan to the Principal Bench of the National Company Law Tribunal (NCLT) at New Delhi for its approval.

Ashish Chhawchharia, RP of the company and National Head for Restructuring Services at Grant Thornton Bharat, said this smooth resolution of a large thermal power asset will boost the confidence of lenders and buyers in the IBC process. “With the prevailing circumstances in the power sector, the resources and management skills from a strong player like Adani Group will be critical for enhancing the productivity of the plant.”

Apart from Adani Power Ltd, Vedanta Ltd, Jindal Power Ltd and state-owned NTPC Ltd had also shown interest in the acquisition of the company through the Corporate Insolvency Resolution Process (CIRP). However, only Adani Power and Vedanta submitted bids.

The company’s liquidation value stood at Rs 1733.4 crore and its fair market value was about Rs 2,657.2 crore.

As per Essar Power Ltd’s website, the EPMPL, located in Madhya Pradesh’s Singrauli district, was built at a cost of Rs 8,000 crore and requires approximately 5.5 million tonnes of domestic coal per year to generate full load.

“The Principal Bench at New Delhi has placed on its website on November 02, 2021, its order dated November 01, 2021, approving the resolution plan submitted by Adani Power for the acquisition of EPMPL, a company undergoing insolvency resolution under the Insolvency and Bankruptcy Code,” said Adani Power on Wednesday in its stock exchange filing.