NCLAT issues notice to Adani Power on plea contesting acquisition of Lanco Power

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

The appeal was filed by Indian Bank’s stressed asset management division, which contested the validity of the resolution plan. It alleged that its claim of about ₹17 crore, which was issued to the holding company Lanco Infratech Limited as a bank guarantee, was improperly rejected by the pesolution professional (RP).

Despite this challenge, the NCLAT’s Chennai bench declined to impose an interim stay on the approved plan and only sought responses from the parties involved.

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The National Company Law Tribunal’s (NCLT) Hyderabad bench had approved Adani Power’s plan in August. Under the plan, which was backed by 95.40% of the Committee of Creditors (CoC), Adani Power proposed to acquire LAPL for ₹4,101 crore. LAPL, which entered bankruptcy in 2019, has outstanding liabilities of about ₹15,633 crore.

Through the acquisition, Adani Power aims to enhance its status as India’s leading private-sector power producer, increasing its operational power generation capacity from 15,250 MW to 15,850 MW, the company said. Adani Power specialises in developing, constructing, and operating power plants. Its notable projects include Mundra Thermal Power Plant (4,620 MW) and Kamuthi Solar Project (648 MW).

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

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

How Adani acquired LAPL

The acquisition faced delays owing to competitive bids from various parties, including Aditya Birla ARC, Vedanta, Edelweiss ARC and Jindal Power. Vedanta and iLabs India Special Situations Fund submitted formal resolution plans in 2020, which were rejected by the CoC due to concerns about their commercial value.

In 2022, a new bidding round attracted interest from Adani Power, Reliance Industries and a consortium comprising PFC Projects and REC Ltd. Adani Power and Reliance withdrew from the auction, leaving the PFC Consortium as the sole bidder with an offer of ₹3,020 crore. 

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

Adani Power subsequently re-entered the auction with an unsolicited offer, raising its bid to ₹4,101 crore. This revised proposal received the necessary approval from the CoC, facilitating the acquisition of LAPL.