Power Trust vs REC Limited & Ors.

3. IA (IB) 1049/KB/2024:

“IA No. 84962 of 2024: It will be open for the appellant to submit a proposal for settlement to the first respondent. If such a proposal is submitted, the same shall be processed in accordance with law. The application is accordingly disposed of.

Civil Appeal No. 2211 of 2024: The notice has already been issued on the statutory appeal. Therefore, the same shall be treated as admitted for final hearing. List on 5^th September, 2024.”

i.

An order to keep in abeyance the present Corporate Insolvency Resolution Proceedings initiated against the Corporate Debtor until further orders;

ii.

Grant an order deferring the process of accepting and evaluating the Eol or sharing of data with the prospective bidders until consideration of the settlement proposal made by the applicant in terms of the order dated 3 May 2024 passed by the Hon'ble Supreme Court of India in Appeal No of 2211 of 2024;

iii.

A direction upon the Resolution Professional of the Corporate Debtor to call for a meeting pursuant to the letter dated 17th May 2024 of the Applicant to arrive at a mutually acceptable proposal along with the lenders and subsequent meetings and to report the discussion to this Court;

iv.

Any such further order that this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case and in the interest of justice.

4. IA (IB) No. 1178/ (KB) /2024:

i.

The interim protection granted by this Tribunal by the said order dated 24.05.2024 be extended to by a period of six weeks and / or till such time that the CoC is able to afford to the applicant a proper opportunity of hearing negotiations and discussions;

ii.

The decision of the CoC dated 07.06.2024 rejecting the proposal for settlement submitted by the applicant be set aside and / or quashed and / or permanently stayed; iii. Mandatory injunction commanding the respondents and each of them, their men, agents, officers and servants to reconsider the proposal for settlement submitted by the applicant together with necessary modifications and / or additions and/ or changes thereto as may be proposed by the applicant pursuant to hearing, negotiations and discussions in the matter; iv. Ad interim orders in terms of prayers (a) to (c ) above; and

v.

Any such further order that this Tribunal may deem fit and proper in the facts and circumstances of the case and in the interest of justice.

"3.

The present Proposal is being issued in good faith and to demonstrate the bona fide of the Trust with the sole intent to achieve the underlined objective of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC"), i.e., to revive and restore the operation of the Corporate Debtor. Our settlement proposal is pursuant to the Order of the Hon'ble Supreme Court of India dated 03.05.2024 and the Order of the Hon'ble NCLT, Kolkata Bench dated 24.05.2024. We, therefore, beseech you to consider this Proposal as our earnest attempt to bring to an end to all disputes and amicably resolve the non-payment of outstanding dues raised by certain creditors of the Corporate Debtor. A copy of the proposal on behalf of the Trust is annexed to this letter as ANNEXURE 1.

4.

It is our whole-hearted intent that the members of the CoC consider the proposal favourably and, we request that our proposal is taken up for further discussions with the members of the CoC so that it could be discussed and finalized taking into account their views and inputs.

5.

We submit that, the Committee of Creditors (CoC) may consider Proposal favourably, inasmuch as, it is in the interest of all the stakeholders of the Corporate Debtor including the Financial Creditors, the Operational Creditors and the statutory authorities. The proposal seeks to provide Inir value realization for the lenders being the members of the CoC while keeping the Corporate Debtor as a "going concern"

6.

The present Proposal is made bona fide and in good faith. Nothing contained in this proposal should be deemed to be admission of any liability nor shall the Trust be liable towards the outstanding dues of the Corporate Debtor.

7.

Given that our proposal provides for fair value realization for the stakeholders, we look forward to favourable consideration of the said Proposal by the CoC. We remain available to provide any information/ document/clarification or to answer any query as and when directed by the CoC.

8.

This Settlement Proposal is towards settlement of the Corporate Debtors' dues. However, the Trust's proposal is subject to negotiation / mutual discussion with the CoC for mutual benefit. Further, we are open to and undertake to rework the same by having a mutual discussion with you and members of CoC.

9.

Further, we state that this proposal is in pursuant to the Settlement Plan in terms of the outstanding debt and as directed by the Hon'ble Supreme Court of India and further directed by Hon'ble NCLT, Kolkata Bench. We are submitting this proposal which is fair and reasonable. Once it is proposal is fully acceptable to you then we will be submitting the same before the Hon'ble NCLT, Kolkata Bench for necessary order.

“(a)

The Corporate Debtor’s power plant is fully operational and a revenue generating asset which can make a significant EBITDA yearly.

(b)

Power trust has offered an amount of INR 1,418.58 Crore out of which INR 317.02 Crore is already adjusted against interest overdue of the term lenders prior to commencement of CIRP, thereby effectively the current offer amounts to INR 1,101.56 Crore only. If this amount is compared with the total outstanding claims of the term lenders (i.e., REC and PFC) admitted in the CIRP of the Corporate Debtor (INR 5,190.05 Cr), it would lead to a haircut of approximately 79%.

(c)

Pursuant to admission of the Corporate Debtor into CIRP, 30+ expression of interest (EOIs) has been received in the process which showcases significant interests from industry wide reputed players and can lead to a value maximization for the lenders.”

1.

"Ld. Sr. Counsel / Counsel for the parties present.

2.

IA(I.B.C)/1049(KB)2024:

a. Heard the Ld. Sr. Counsel Mr. Joy Saha appearing for the Power Trust and Ms. Manju Bhuteria appearing for the Resolution Professional, at length.

b. The contention of the Ld. Sr. Counsel for the Petitioner is that pursuant to an order dated 03.05.2024, the Hon'ble Apex Court permitted the Appellant / Power Trust (Promoter of Hiranmaye Energy Limited ) to submit a proposal for settlement to the first Respondent which if permitted shall be processed in accordance with law. On the same day Civil Appeal No. 2211 of 2024 was admitted for final hearing.

c. Emboldened by the said liberty, the Petitioner has given a detailed settlement agreement in regard to the dues of INR 1,101.56 Crores as under:

Amount (INR in Crores)	Details
75.00	The Promoter shall make the Corporate Debtor deposit INR 75 Crores (“Upfront Amount”) within five (5) working days from the date on which the settlement plan is approved by the Ld. NCLT, Kolkata (“NCLT Approval Date”).
1026.56	The balance payment of INR 1026.56 Crores may be paid upfront within ninety (90) Working Days. The Lenders agree that they shall have no charge on any assets once the above payment has been made.

d. The contention of the Ld. Sr. Counsel is that the settlement proposal deserves consideration for:

i.

The total profit earned by the Corporate Debtor before interest, taxes, depreciation and amortization (EBIDTA) for the financial year 2021-2022 and financial year 2022-23 is INR 259.94 crores and INR 308.03 crores respectively. Consequently, the Corporate Debtor cannot by any stretch of imagination be deemed to be insolvent;

ii.

During current financial year i.e. 2023-24 between 01.04.2023 to 31.01.2024, the Corporate Debtor raised bills and/or invoices upon the West Bengal State Electricity Distribution Co. Ltd. (hereinafter referred to as the "WBSEDCL") for a total sum of INR 747.98 crores demonstrating the complete solvency of the Corporate Debtor; iii. In fact, even during the pendency of the Company Petition, the Corporate Debtor has made a total payment of INR 187.28 crores and INR 129.74 crores to the Respondent No.2 and PFC Ltd., respectively. iv. The Corporate Debtor had a subsisting Power Purchase Agreement with West Bengal State Electricity Distribution Company Limited (WBSEDCL) whereby the entire quantity of power generated by the Corporate Debtor is supplied to WBSEDCL as per its fixed tariff;

v.

The Corporate Debtor has a subsisting and ongoing Fuel Supply Agreement under the Shakti Scheme with Mahanadi Coal Fields Ltd. whereby, the supply of raw materials to the Corporate Debtor is completely assured. vi. A profit-making power plant having an assured continuous supply of raw materials and an assured State Utility Purchaser of the entire quantity of power generated by it, could not be driven into insolvency.

e. It appears from a letter dated 22.05.2024 from the RP that, the IRP of Hiranmaye Energy has proposed in response to the letter dated 17.05.2024, from Power Trust, for a meeting to arrive at mutual acceptable proposal sent pursuant to the Hon'ble Apex Court order dated 03.05.2024, as referred to hereinabove. It says the “The RP has requested Power Trust to hear settlement proposal that it intends to place before the Committee of Creditors (CoC) of Hiranmaye Energy Ltd. for their lawful consideration and further action and therefore, Ld. Sr. Counsel Mr. Joy Saha would contend that the proposal will be placed before the CoC through RP in two days for which the following prayers be allowed:

i.

Grant an order to keep in abeyance the present Corporate Insolvency Resolution Proceedings initiated against the Corporate Debtor until further orders; ii. Grant an order deferring the process of accepting and evaluating the EoI or sharing of data with the prospective bidders until consideration of the settlement proposal made by the applicant in terms of the order dated 3 May 2024 passed by the Hon'ble Supreme Court of India in Appeal No of 2211 of 2024; iii. A direction upon the Resolution Professional of the Corporate Debtor to call for a meeting pursuant to the letter dated 17th May, 2024 of the Applicant to arrive at a mutually acceptable proposal along with the lenders and subsequent meetings and to report the discussion to this Court;

f. Ld. Sr. Counsel also points out that 180 days of the CIRP is not yet over. A provisional list of Prospective Resolution Applicants has been prepared and published, and an extension of time to put in EoI has been granted.

g. Per contra, vehemently opposing the move on the part of Power Trust, Ld. Counsel Ms. Bhuteria appearing for the RP would submit that the application should be dismissed with cost as CoC is not impleaded and no stay of CIRP be granted as prayed for, for a stay that was sought for before the Hon'ble Apex Court was not granted and therefore, matter does not warrant any order staying the CIR Process.

- h. We considered the rival contentions and perused the records. - i. We are of the considered opinion that the Appellant being permitted by the Hon'ble Apex Court to submit a proposal for settlement, to the first Respondent, settlement proposal on behalf of the Power Trust if any be communicated to the RP in three days. - j. The RP upon receipt of such proposal shall place it before the CoC by calling an appropriate meeting for the purpose. - k. The CoC will consider the proposal, in light of the order passed by the Hon'ble Apex Court on 03.05.2024 (as referred to supra) and take a decision within a period of two weeks thereafter on the proposal. - l. Till such time, in the interim, we deem it appropriate to direct that the CIRP proceedings be kept in abeyance till a decision is arrived at by the CoC on the settlement proposal of the Power Trust. - m. Let a plain copy of the order be made available to the parties for communication and compliance. - n. List the matter on 14.06.2024.

“IA No. 84962 of 2024: It will be open for the appellant to submit a proposal for settlement to the first respondent. If such a proposal is submitted, the same shall be processed in accordance with law. The application is accordingly disposed of.

Civil Appeal No. 2211 of 2024: The notice has already been issued on the statutory appeal. Therefore, the same shall be treated as admitted for final hearing. List on 5^th September, 2024.”

(a)

The Corporate Debtor's power plant is fully operational and a revenue generating asset which can make a significant EBITDA yearly.

(b)

Power trust has offered an amount of INR 1,418.58 Crore out of which INR 317.02 Crore is already adjusted against interest overdue of the term lenders prior to commencement of CIRP, thereby effectively the current offer amounts to INR 1,101.56 Crore only. If this amount is compared with the total outstanding claims of the term lenders (i.e., REC and PFC) admitted in the CIRP of the Corporate Debtor (INR 5,190.05 Cr), it would lead to a haircut of approximately 79%.

(c)

Pursuant to admission of the Corporate Debtor into CIRP, 30+ expression of interest (EOIs) has been received in the process which showcases significant interests from industry wide reputed players and can lead to a value maximization for the lenders."