Bondholders and lenders of GVK Power Goindwal settle disputes over priority payment

Mumbai: The bondholders of GVK Power (Goindwal Sahib) and its lenders have decided to amicably settle the dispute over the priority of dues of about Rs 295 crore.

In June, IDBI Trusteeship had approached the court on behalf of DB International (Asia), an affiliate of Deutsche Bank, seeking the court’s intervention to get about Rs 295 crore under the Trust and Retention Account (TRA) Agreement from the IDBI Bank. The bondholders claimed that being priority lenders, they have right over the money over the banks.

“The parties have settled their dues,” said Justice GS Patel in his order of August 19. “The contesting defendants (IDBI Bank and other lenders) have agreed to make a payment of Rs 295.32 crore to the priority lender and the priority lender has agreed to accept this amount in full and final satisfaction of the claims of the priority lender.”

In the year 2017, the local subsidiary of Deutsche Bank had extended a priority facility of Rupee Term Loan Facility and had also issued non-convertible debentures where DBIA subscribed to the Priority Bonds for a face value of Rs 307.

Last year, Axis Bank had approached the Hyderabad-bench of the National Company Law Tribunal (NCLT) against GVK Power after it failed to repay its dues.

Subsequently, the offshore lenders sent a bond acceleration notice and demanded to immediately apply all outstanding amounts lying to the credit of the TRA towards repayment of the due amounts under the priority bonds.

The offshore lenders have claimed that they have sent several reminders between January and May to the IDBI Bank to release the amount in the TRA account but so far the bank has not responded and hence they had approached the Bombay High Court to recover the money.

“Within seven days of the receipt of the payment the plaintiff/priority lenders will also take the necessary steps to have the Registrar of Companies (RoC) charges that have been registered withdrawn and deleted,” said the 3-page order.

In its plea, the bondholders had argued that “the defendant No 1 (IDBI Bank) has deliberately withheld payments in brazen breach of its contractual and fiduciary duties and the plaintiff (IDBI Trusteeship) verily believes that if the said account continues to remain within the control of defendant No 1, then it may illegally debit the said account and withhold the monies.”

Senior counsel Janak Dwarkadas was representing the offshore lenders in the case, while IDBI Bank is being represented by senior counsel Birendra Saraf and Nishit Dhruva, managing partner of MDP & Partners.