Lanco Kondapalli Power admitted into IBC process

The National Company Law Tribunal, Hyderabad, has admitted Lanco Kondapalli Power Ltd for insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Axis Bank, the lender for the group company of Lanco Infratech Ltd, had dragged the Kondapalli project for insolvency proceedings following default in payment of statutory dues.

Lanco Infratech Ltd, a listed entity which is the parent holding company, has also gone through the insolvency resolution process. Following the failure to get a suitor for the holding company, liquidation process is currently under way.

Lanco Kondapalli is the first project that the Lanco group had taken up and over a period, it has set up a gas and naptha power project of 368 MW. Later, another project of 366 MW was set up at the Kondapalli village, located about 15 km from Vijayawada. It has a pipeline link that connects the project with the KG Basin. Shortage of fuel supplies from the KG Basin hampered the performance of the Kondapalli power project, resulting in delayed payments and later default in payments.

K Anantha Padmanabha Swamy, Member Judicial, NCLT, Hyderabad, while admitting the insolvency petition of Axis Bank, appointed Pankaj Dhanuka as Insolvency Resolution Professional (IRP).

While handing over charge to the IRP, NCLT directed him to make public announcement about the insolvency proceedings and ordered moratorium against institution of suits and continuing pending cases.

Following successful completion of the Phase I of the gas fired power project and assurance of allocation of 1.6 mmscmd of gas by the government from the Krishna and Godavari Basin, Lanco initiated expansion project of 366 MW combined cycle power plant, wherein a consortium of 10 lenders sanctioned a loan of ₹1,188 crore.

Power woes

While Lanco was the successful bidder for gas allocation, it could not operate the plant due to lack of committed power purchase agreements with distribution companies. This resulted in stalling the operations of the plant. Later, the lenders converted ₹890 crore, being part of the loan amount into equity under Strategic Debt Restructuring Scheme of the RBI. While admitting the petition for insolvency proceedings, the NCLT ordered resolution within 180 days.

Lanco Thermal Power

The NCLT also admitted another petition by Andhra Bank for resolutions of the Lanco Thermal Power Ltd under the Insolvency Code.

Judicial Member Ratakonda Murali, while admitting the petition under the Corporate Insolvency Resolution Process, has ordered moratorium granted to cases admitted under the insolvency resolution process.

The petitioner mentioned that the Lanco group entity had secured funds based on three of its major assets, including Lanco Amarkantak Power Ltd of 1,320 MW, Lanco Babandh Power of 1,320 MW and Lanco Vidharbha Power of 1,320 MW.

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