Insolvency proceedings initiated against Essar Power by NCLT

The Principal Bench of the NCLT on April 5 admitted insolvency proceedings against another Essar Group Company, Essar Power Jharkhand Ltd, for a debt amounting to more than ₹3000 crores..Interestingly, unlike with Essar Steel, the Ruias this time chose not to oppose the petition at all. The petition was filed by ICICI Bank in its capacity as a financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC)..It appears that Essar Power is part of the Reserve Bank of India’s second list of defaulters, who were given time until 13 December, 2017, to resolve their account..While there was no opposition, this may be one of the few orders where the NCLT suo moto found that the proposed resolution professional, Aashish Gupta, suffers from ‘serious illegalities’. In its interim order dated January 16, 2018, the bench found an ‘element of patent bias impinging upon the independent character of the resolution profession.’ Accordingly, a new resolution professional was appointed, Huzefa Fakhri Sitabkhan..Another interesting aspect of this order is that the NCLT has barred termination or suspension of any essential services during moratorium. It ruled,.“It is made clear that the provisions of the moratorium shall not apply to transactions, which might be notified by the Central Government.”.The Bench headed by Justice MM Kumar while admitting the insolvency proceedings, stated,.“We are satisfied that a default has occurred and the application under subsection 2 of section 7 is complete; and no disciplinary proceedings are pending against the proposed IRP. Thus, the application warrants admission.”.(Read the order)