The Committee of Creditors of the defunct wind turbine manufacturer, Regen Powertech Pvt Ltd, is opposing moves for fresh joint bids for the company along with a wholly-owned subsidiary, Regen Powertech Infrastructure Services Ltd, eventhough the bidders say a joint bid might fetch a higher value.

Regen Powertech owes its creditors about ₹1,950 crore and has filed for insolvency. Nasdaq-listed ReNew Power, a leading renewable energy company, emerged as successful bidder.

Two separate cases

The subsidiary, RISPL, was formed to provide operations and maintenance services to the parent company’s (RPPL) customers. Thus, the businesses of the two companies are closely linked. However, they are two separate cases at the NCLT.

Prospective bidders, many of whom are customers of RPPL, want the two to be combined, and say a joint bid might maximise value. The CoC of RPPL is opposing it. The issue will come up before the National Company Law Tribunal for hearing on September 13.

ReNew has offered ₹167 crore for the company that has cash and receivables of around ₹70 crore, effectively paying less than ₹100 crore, or 5 per cent of the total dues of ₹1,950 crore.

There are parties – the Coimbatore-based Sulochana Cotton Spinning Mills and Ahmednagar-based Malpani group to name two – who have asked for a re-starting the process, this time consolidating Regen Powertech and Regen Infrastructure Services.

The ‘Resolution Professional’ (the person appointed to run a company under insolvency and, therefore, a virtual CEO) of RISPL pleaded that a joint bid might bring in more value. Sulochana Cotton also says “there is significant scope for maximisation of value of assets of both RPPL and RISPL”.

However, the Committee of Creditors of RPPL are opposing it on the grounds that it will delay the process.

Now more than 25 parties, mostly customers of RPPL such as GAIL and Nupower Renewables, have moved the NCLT opposing separate bids for RPPL and RISPL.

Resolution plan

On April 5, the NCLT appointed a retired High Court Judge, R Kannan, as the mediator, “to explore the possibility of maximisation of the value of the assets” of RPPL, together with the wholly-owned subsidiary, RISPL. This meeting was held on April 19.

But even as the mediation process was going on, the Resolution Professional of RPPL, Ebenezar Inbaraj, convened a meeting the Committee of Creditors and passed the Resolution Plan.

In its ‘Common Order’ of April 27, the NCLT said that “pending the outcome of the mediation, it is not appropriate on the part of the RP (of RPPL) to call for a CoC meeting and approve the Resolution Plan in a hurry”. Also, RPPL has failed to pay ₹50,000, which is its share of the mediator fee.

The call for bids for RPPL was advertised on March 15, 2020 and the last date was June 15. The call for RISPL was on October 15. The stand of the bidders for RISPL is that the business of RISPL is dependent upon RPPL and hence they should be allowed to bid for both.

Notably, Sulochana Cotton and others bid for RISPL before the RPPL bid was finalised.

RISPL’s prospective bidders are worried that there might be nothing to bid for because there is a business transfer agreement between the company and another, newly set up subsidiary of RPPL, called Regen O&M Services Pvt Ltd (ROMSL). ROMSL has not yet paid the consideration of ₹151 crore for the purchase to RISPL. If ReNew Power takes over RRPL, it will be under the condition that all liabilities would stand extinguished. RISPL may never see its money, while the legal status of the O&M contracts remain under a cloud. The Resolution Professional of RISPL has petitioned NCLT to declare the business transfer deal between RISPL and ROMSL as fraudulent.

Meanwhile, several stakeholders have raised doubt over the valuation of RRPL, claiming that lands and other assets have not been valued. If these are taken into account, ReNew Power might be bagging Regen Powertech practically for free.

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