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Sinnar Thermal Power (STPL), a subsidiary of RattanIndia Power, has lost control as the bankruptcy appellate court lifted the stay on initiating corporate insolvency proceedings against the company. STPL operates a 1,350 MW power plant in Nashik, Maharashtra, and has a total debt estimated at ₹6,000 cr.
The National Company Law Tribunal (NCLT) admitted STPL for corporate insolvency on September 19, 2022. However, a week later, the appellate tribunal stayed the proceedings, citing the government's efforts to revive thermal power projects amid a power shortage. Shapoorji Pallonji and Co, operational creditors owed ₹62 cr for their work on the plant, requested the lifting of the stay. The Delhi High Court had earlier stayed the revocation of their bank guarantee on August 20, 2019.
RattanIndia alleged that payment delays were due to slow project progress, causing the delay. The appellate tribunal, while lifting the stay, emphasised that project delays cannot be considered an issue affecting the rights of operational creditors under Section 9 of the Insolvency and Bankruptcy Code.
Lenders, hoping to recover at least half of the ₹6,000 cr debt, are encouraged by recent interest from companies like Adani Power, Jindal Power, and Vedanta in acquiring distressed power companies through the insolvency process.
STPL, with five commissioned units, is unable to commence commercial operations due to the lack of a power purchase agreement for power off-take. The company has coal linkages from Coal India's subsidiaries. RattanIndia Power has two special-purpose vehicles for power production in Amravati and Nashik, both with a capacity of 1,350 MW. The debt of the Amravati power plant was restructured in 2019, while the attempt to restructure the Nashik power plant's debt was unsuccessful.
STPL, a distressed power producer, faces corporate insolvency proceedings after the appellate tribunal lifted the stay, and lenders are optimistic about recovering a portion of the ₹6,000 cr debt through the insolvency process. The company's inability to start commercial operations is attributed to the absence of a power purchase agreement, despite having coal linkages.
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