NCLT asks Swan Energy to make upfront payment to Reliance Naval

9 Oct 2023 , 09:29 AM

According to news reports, the NCLT Ahmedabad bench has ordered Swan Energy, the company that won the bidding war to acquire Reliance Naval and Engineering Ltd in an insolvency action, to make the upfront payment that was called for in the resolution plan. 

Despite the resolution plan’s recommended upfront payment of about Rs 250 crore having passed its second extended date on September 14, Swan Energy has refused to do so.

The firm has once more requested an extraordinary third extension of two months from the NCLT.

According to reports, the Swan Energy case was heard by the NCLT Ahmedabad bench on October 5. The business was told to make the payment as outlined in the resolution plan before the NCLT could consider Swan Energy’s request for a third extension.

The 22nd of November has been set aside for the next hearing in this case.

Swan Energy was required to make an advance payment of Rs 293 crore to the lenders of RNEL by March 23, 2023, in accordance with the resolution plan approved by the NCLT Ahmedabad. However, on Swan’s request, this deadline was extended to July 23, 2023.

The company again contacted the NCLT Ahmedabad to request a second extension after it was unable to secure the necessary money to make the upfront payment by the original date.

Swan received a second 45-day extension from NCLT on August 1 that concluded on September 14.

The corporation has since submitted a new application to the NCLT asking for a third two-month extension.

Swan Energy and Hazel Mercantile were the chosen resolution applicants for the Gujarat shipyard of Reliance Naval. The NCLT accepted their Rs 2,133 crore resolution plan in December 2022.

By the end of March, the lenders were expected to receive Rs 293 crore towards the upfront payment, but even after 10 months, the consortium has not made a payment to the lenders.

In order to maintain the RNEL as a continuing concern, the consortium has so far contributed roughly Rs 50 crore.

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