NCLT Clears Vedanta's Acquisition of Meenakshi Energy Amidst Objections

17 Aug 2023 , 11:26 AM

The National Company Law Tribunal’s (NCLT) Hyderabad bench has given approval to Vedanta Ltd, led by Anil Agarwal, to acquire Meenakshi Energy Ltd, a power company burdened by debt. This decision comes despite objections from a competing bidder consortium comprising Prudent ARC Ltd and Vizag Minerals & Logistics.

The consortium of Prudent ARC sought to halt the Challenge Process led by the Committee of Creditors (CoC) and the Resolution Professional, which resulted in Vedanta being chosen as the preferred resolution applicant.

Vedanta’s bid to acquire Meenakshi Energy was for Rs 1,440 crore. This bid included an upfront payment of Rs 312 crore and an additional Rs 1,128 crore in the form of secured, unlisted non-convertible debentures maturing over five years.

Meenakshi Energy, which owns a 1,000-megawatt thermal power plant, entered the corporate insolvency resolution process (CIRP) in early 2019. The CIRP period was extended multiple times due to factors like Covid-related lockdowns.

The Consortium of Prudent ARC argued that Vedanta made two revisions to its resolution plan through addendums, which it claimed was against the provisions of the Insolvency and Bankruptcy Code (IBC).

The Consortium also contested the CoC’s decision to extend timelines and questioned the alignment with the time-bound nature of the IBC. During the challenge process, Vedanta revised its bid amount to Rs 1,440 crore, while Jindal Power revised its bid to Rs 1,344 crore.

The NCLT’s Hyderabad bench, consisting of judicial member Justice Telaprolu Rajani and technical member Charan Singh, upheld the decision of the CoC to proceed with the Challenge Process, stating that the maximization of the value of the corporate debtor’s assets is of prime importance. The bench also stated that the CoC has the authority to allow multiple modifications to the resolution bids.

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