NCLAT issues notice to Adani Power over plea plea over acquisition of Lanco Power

The National Company Law Appellate Tribunal (NCLAT) on Monday issued notice to Adani Power Ltd in response to a plea challenging its approved resolution plan for the acquisition of bankrupt Lanco Amarkantak Power Limited (LAPL).

The appeal was filed by Bank of India’s asset management arm, which had challenged the validity of the resolution plan. It claims that what it claims is approx. $Rs 170 million issued as bank guarantee to the holding company Lanco Infratech Limited was improperly rejected by Pesolution Professional (RP).

Despite this challenge, the Chennai bench of NCLAT refused to put the approved plan on hold and only sought responses from the parties concerned.

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The National Company Law Tribunal (NCLT) Hyderabad bench had approved Adani Power’s plan in August. Under the plan, Adani Power proposed to acquire LAPL with 95.40 per cent support from the Committee of Creditors (CoC). $4,101 Crores. LAPL entered bankruptcy proceedings in 2019 with outstanding debt of approx. $15,633 Crores.

With this acquisition, Adani Power aims to enhance its position as India’s leading private power producer and increase its operational generation capacity to 15,850 MW from 15,250 MW, the company said. Adani Power specializes in the development, construction and operation of power plants. Its notable projects include Mundra Thermal Power Plant (4,620 MW) and Kamuti Solar Project (648 MW).

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Adani Power said it has the capacity to manage the acquisition of LAPL, which operates a 600 MW thermal power plant at Korba in Chhattisgarh and has a long-term power purchase agreement to supply power to Haryana and Madhya Pradesh .

Under the Insolvency and Bankruptcy Code (IBC), the acquisition must be completed within 60 days from the date of NCLT approval, which is October 20, 2024 in this case. Adani Power completed its acquisition of LAPL on September 6, according to regulatory filings.

How Adani acquired LAPL

The acquisition faced delays due to bids from various parties including Aditya Birla ARC, Vedanta, Edelweiss ARC and Jindal Power. Vedanta and iLabs India Special Situations Fund submitted a formal resolution plan in 2020, but it was rejected by the CoC due to concerns about its commercial value.

In 2022, a fresh round of tenders attracted interest from Adani Power, Reliance Industries and a consortium consisting of PFC Projects and REC Ltd. Adani Power and Reliance withdrew from the auction and PFC consortium emerged as the sole bidder with a bid of $30.2 billion rupees.

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Although the CoC initially approved the plan, it was challenged by some creditors, leading the NCLT to reject the plan on November 2, 2023.

Adani Power subsequently made an unsolicited offer to re-enter the auction, raising the bid to $4,101 Crores. The revised proposal received the necessary approvals from the CoC, facilitating the acquisition of LAPL.