Gensol Group Encounters Insolvency Challenges Due to Ireda Obligations
The National Company Law Tribunal (NCLT) in Ahmedabad has initiated corporate insolvency resolution processes (CIRP) for Gensol Engineering Limited (GEL) and its subsidiary, Gensol EV Lease (GEVL), following petitions filed by the Indian Renewable Energy Development Agency (Ireda). The tribunal admitted the petitions due to significant outstanding dues, amounting to over ₹729 crore combined. This development comes amid allegations of financial misconduct involving the company’s promoters, raising concerns about the management of funds and corporate governance.
Insolvency Proceedings Against Gensol Engineering
The NCLT has accepted Ireda’s petition against Gensol Engineering for defaulting on dues totaling ₹510.10 crore. These dues are linked to term loans provided by Ireda for various projects undertaken by GEL. The tribunal confirmed that Ireda had sufficiently demonstrated the existence of financial debt and default under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016. This ruling marks a significant step in addressing the financial troubles faced by GEL, which has struggled to meet its repayment obligations.
Issues Surrounding Gensol EV Lease
In a separate ruling, the tribunal also admitted insolvency proceedings against Gensol EV Lease for outstanding dues of ₹218.95 crore. According to Ireda’s petition, GEVL had taken multiple term loans for electric vehicle leasing and related infrastructure projects. The defaults were exacerbated by cross-default provisions linked to Gensol Engineering’s repayment failures. The tribunal dismissed GEVL’s arguments that the defaults were premature and that the debt had not crystallized, affirming the validity of the cross-default clauses in the loan agreements.
Conflict of Interest and Interim Resolution Professional
During the proceedings, Gensol EV Lease raised concerns about a potential conflict of interest regarding Ireda’s nomination of Pulkit Gupta as the interim resolution professional. The tribunal acknowledged these concerns and appointed Keshav Khaneja as the new interim resolution professional to oversee the CIRP process. This decision aims to ensure a fair and impartial resolution process for both companies as they navigate their financial difficulties.
Background of Financial Misconduct Allegations
The troubles for Gensol began following investigations by the Securities and Exchange Board of India (Sebi) two months ago. Reports indicated that the company’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, allegedly misused loans from various creditors. They reportedly used these funds for personal purchases, including a luxury flat, and to manipulate Gensol’s stock price. Additionally, they were accused of forging no-default letters from lenders to falsely present the company’s financial health. These allegations have raised serious questions about the governance and financial practices within Gensol, prompting regulatory scrutiny and the current insolvency proceedings.
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