NCLAT rejects SBI's pleas on ITPCL liquidation value

NCLAT rejects SBI's pleas: National Company Law Appellate Tribunal (NCLAT) dismissed State Bank of India's (SBI) opposition to the liquidation value of IL&FS Tamil Nadu Power Company Ltd (ITPCL) provided by Punjab National Bank (PNB), stating that SBI cannot alter the debt restructuring process of the thermal power company.

In its ruling earlier this month, NCLAT rejected all three applications filed by SBI, affirming the liquidation value as of September 30, 2018. The tribunal emphasised that an inter-creditor agreement among lenders, with over 90 per cent approval for ITPCL's restructuring plan, binds SBI to the agreed terms.

The ruling comes amid disagreements over the valuation date, with SBI arguing for a valuation as of March 31, 2023, as opposed to PNB's valuation from October 15. However, NCLAT upheld the earlier liquidation value, citing its acceptance in a prior order.

PNB's appointment of two valuation firms, resulting in disparate valuations, led to the engagement of a third valuer, as per regulations. Despite SBI's objections, NCLAT affirmed the communication of the liquidation value to all parties.

During proceedings, PNB and ITPCL noted that SBI's stance could affect its entitlement under the restructuring plan, with potential implications for fund distribution. SBI retains the option to provide consent or dissent to secure its share in accordance with the plan's terms.

The ruling marks a significant development in the ongoing debt restructuring process of IL&FS group entities, with ITPCL categorised as an "amber" company. As part of IL&FS's restructuring roadmap, companies are classified based on financial positions, with ITPCL among those needing attention.

The IL&FS group, comprising 302 entities, faces a substantial debt burden, underscoring the complexity of the ongoing restructuring efforts in India's financial landscape.

(with PTI inputs)