Two Lanco Infratech subsidiaries set to see resolution under IBC

Two of the subsidiary companies of Lanco Infratech, which was liquidated under the Insolvency and Bankruptcy Code (IBC) in 2018, are all set to get successfully acquired by new promoters under the same IBC.  The insolvency proceedings of one of the subsidiaries -- Lanco Thermal Power -- has ended in resolution with the Committee of Creditors (CoC) giving its approval to resolution plan jointly submitted by a power sector firm and a distressed asset fund.

Sources told BusinessToday.In that insolvency case of another subsidiary - Lanco Solar Energy - is also likely to get resolved in a month or two.

Resolution professional Praveen Bansal, who is presiding over the insolvency process of Lanco Thermal Power, confirmed that the resolution application submitted jointly by a significant player in the power sector and a distressed asset fund has been approved by the CoC comprising 22 financial creditors.

According to Bansal, all except two (financial creditors) voted in favour of the resolution plan. The resolution professional had received claims of about Rs 33,000 crore from financial creditors. Majority of the claims were submitted by financial creditors having corporate guarantee or charge on shares of special purpose vehicles.  

"It was quite challenging to converge the interest of direct lenders and indirect lenders to get support of financial creditors with requisite majority for approval of the resolution plan," says the resolution professional.  According to Bansal, the matter was complex because it was a holding company having invested in special purpose vehicles to invest in power projects or to hold investment in group companies.  

"Majority of value of the assets of the corporate debtor (Lanco Thermal Power) was in hydro plant and shares with controlling interest in gas based plant. The risk of investment is different from perspective of potential resolution applicants. Multiple methodologies within the framework of the Code were explored and finally, it culminated into joint resolution applicants with demerger of assets," says Praveen Banal, who is also handling the Lanco Solar Energy Pvt Limited.

Now, the resolution plan will be put before the National Company Law Tribunal for final approval.  In the normal period, it takes one-two months for the NCLT to approve the resolution plan. It takes longer time if there are any petitions filed against the approval of the resolution plan. As of now, no adverse application has been filed against the approval of resolution plan.

The resolution professional says that due to COVID-19, only urgent matters are listed and heard by the NCLT through virtual mode, hence approval by the tribunal may take 3-4 months time.