Banks led by Axis Bank have scheduled a Swiss Challenge auction to sell principal debt of ₹2,569 crore and $27.7 million in overseas currency loans of the distressed power company on August 8.
Last month, lenders rejected a ₹1,260-crore one-time settlement the promoter offered and chose CFM Asset Reconstruction Company’s ₹1,220 crore offer as an anchor bid for the Swiss auction.
On August 2, a division bench of Justice GS Patel and Justice Neela Gokhale adjourned the matter to August 30 for further hearing.
Vidarbha Industries Power and its affiliate Rosa Power Supply approached the court on June 20 through law firm Mulla & Mulla & Craigie Blunt & Caroe. The power producer has filed a petition against Axis Bank and the Reserve Bank of India, represented by Khaitan & Co.
Senior counsels Harish Salve and Prateek Seksaria appeared for Vidarbha Industries while senior counsels Janak Dwarkadas and Venkatesh Dhond appeared for Axis Bank and RBI. Senior officials from Anil Ambani group declined to comment on the matter.Lenders have shortlisted Aditya Birla ARC, Avenue Capital-backed Asset Reconstruction Company of India (Arcil), and Reliance ARC as eligible candidates to submit counter offers at the Swiss auction.The High Court has not granted a stay, and the next hearing is scheduled August 30. So, it is likely that lenders will go ahead with the auction, said a legal expert. As an anchor bidder, CFM ARC will have the first right to match the highest offer that lenders receive on August 8.
Vidarbha Industries operates two coal-based units of 300mw each at the Butibori industrial area in Nagpur. It had a power purchase agreement with Anil Ambani-promoted Reliance Infrastructure. In 2017, it sold the Mumbai distribution business to Adani Transmission.
Vidarbha had a coal supply agreement with Western Coalfields Ltd for one 300mw unit and it purchased coal for another unit from the market. However, after Adani Electricity Mumbai Ltd terminated the PPA, WCL also cancelled its contract. The matter is under dispute and pending a hearing from the Supreme Court.
The battle to acquire the power producer has stoked expectations of a quick recovery for lenders disheartened by the Supreme Court order rejecting a plea to admit the company for insolvency proceedings despite a default.
Last July, the apex court dismissed Axis Bank’s petition to admit Vidarbha Industries for insolvency, stating that the National Company Law Tribunal, which approved admitting the company, should have considered external factors that had led to the delay in payments by the borrower.
At the heart of the matter is a claim made by Vidarbha Industries that has won an award of ₹1,730 crore from the Appellate Tribunal of Electricity. This amount exceeded the ₹553 crore claimed by Axis Bank.
