GVK Energy plan rejection leaves Rs 1,050 crore unresolved

GVK Energy Limited’s resolution plan was rejected by the National Company Law Tribunal despite 100% Committee of Creditors approval, leaving Rs 1,050.03 crore of Phoenix ARC claims admitted for insolvency purposes without a provision in its accounts. An extension of the Corporate Insolvency Resolution Process is being sought to address the tribunal’s observations.

Why did NCLT reject GVK Energy’s resolution plan?

The National Company Law Tribunal rejected GVK Energy’s resolution plan because it identified deficiencies and lacunae in the plan and the related process. The filing says the Committee of Creditors, or CoC, approved the proposal with 100% voting share, but tribunal approval was not obtained. It does not disclose the specific deficiencies, the plan terms or the identity of the resolution applicant.

GVK Energy entered the Corporate Insolvency Resolution Process, or CIRP, under an NCLT order dated May 6, 2025, in CP. 104/07/HDB/2023, uploaded on May 7, 2025. The insolvency application was filed on April 8, 2023 under Section 7 of the Insolvency and Bankruptcy Code, 2016, as GVK Energy was a guarantor for borrowings of GVK Power (Goindwal Sahib) Limited.

Following the plan rejection, an extension of the CIRP period is being sought to address the NCLT observations and continue the resolution process. The filing does not state a revised deadline, a hearing date, an alternative plan or a possible creditor recovery. It says the outcome of the CIRP and consequential financial implications remain uncertain.

What is Phoenix ARC’s admitted claim against GVK Energy?

Phoenix ARC filed claims of Rs 1,163.99 crore against GVK Energy, and the Resolution Professional admitted Rs 1,050.03 crore for CIRP purposes. The Rs 113.96 crore difference between the filed and admitted amounts was not admitted in the claim figure disclosed by GVK Energy. No provision has been made for the admitted Rs 1,050.03 crore claim.

The facilities underlying the claim had been provided in earlier years to GVK Energy and Alaknanda Hydro Power Company Limited, or AHPCL, by the Edelweiss group and ARCIL. They were secured by pledged shares of GVK Power & Infrastructure Limited group companies and supported by corporate guarantees from GVK Energy and GVK Power & Infrastructure. Edelweiss and ARCIL subsequently assigned the facilities to Phoenix ARC.

The filing treats the claim as part of the continuing CIRP rather than as an accounting provision. It says GVK Energy has not accounted for an additional liability arising from the alleged annulment of a settlement because of pending legal proceedings, the earlier share pledge invocation, the assignment to Phoenix ARC and the ongoing insolvency process.

What events led to Phoenix ARC’s claim against GVK Energy?

Edelweiss invoked pledged AHPCL shares on May 16, 2022 and transferred 46,60,11,000 AHPCL equity shares with a face value of Rs 10 each that GVK Energy held. GVK Energy transferred the related AHPCL liability concerning Edelweiss in its accounts and, based on legal opinion, considered the loan liability discharged against the invoked shares pending a settlement.

GVK Energy filed a suit in the Delhi High Court on May 30, 2022, arguing that the transfer of a valuable asset discharged its loan liability. It also pleaded that the share value exceeded the outstanding loan and that excess shares should be returned. The filing does not disclose a value for the shares, the present court stage or any judicial finding on those arguments.

GVK Energy, AHPCL and GVK Power & Infrastructure entered a settlement on October 9, 2023 for Rs 330 crore carrying interest of 12.5%. The arrangement was not fully complied with, despite extensions through July 31, 2024. The companies paid Rs 130 crore, while Rs 200 crore was to be arranged by the lead lender, before Edelweiss and ARCIL assigned the facilities to Phoenix ARC.

How did GVK Energy’s CIRP affect GVK Power & Infrastructure?

GVK Power & Infrastructure lost control of GVK Energy and its subsidiaries on May 6, 2025, the CIRP admission date, and deconsolidated them under Indian Accounting Standard 110, or Ind AS 110. It recognised an exceptional loss of Rs 1,041.58 crore in consolidated results for the period ended June 30, 2025, based on management-certified financial statements.

GVK Power & Infrastructure also impaired Rs 841.20 crore of investments in GVK Energy and Rs 196.90 crore of loans to GVK Energy during the quarter ended June 30, 2025. These two impairments totalled Rs 1,038.10 crore, while the filing presents the Rs 1,041.58 crore deconsolidation loss as a separate accounting disclosure.

The parent’s loss of control removed GVK Energy and its subsidiaries from the consolidated group from May 6, 2025. GVK Energy’s role as guarantor for GVK Power (Goindwal Sahib) Limited borrowings is identified in the filing, but the source does not disclose the value of the guaranteed facilities or any expected distribution to creditors through the CIRP.

What happens next in GVK Energy’s insolvency process?

The next disclosed step is a request for an extension of GVK Energy’s CIRP to address the deficiencies and lacunae identified by the NCLT. The source does not specify how the resolution plan will be revised, whether it will return to the CoC, or when the tribunal may decide on the extension. Phoenix ARC’s Rs 1,050.03 crore admitted claim remains subject to the eventual CIRP outcome.

AHPCL issued 203,137 non-convertible debentures, or NCDs, of Rs 1 lakh each on April 5, 2025 and prepaid its entire outstanding loan on April 11, 2025, including accrued interest. The filing records no prepayment fee for the period ended June 30, 2025, compared with Rs 98 lakh for the year ended March 31, 2026, and says the transaction occurred before AHPCL’s May 6, 2025 deconsolidation.

Conclusion

The NCLT rejection means that unanimous CoC approval has not completed GVK Energy’s resolution. The disclosed Phoenix ARC exposure is Rs 1,050.03 crore admitted for CIRP purposes and unprovided for, while the earlier share invocation, the Rs 330 crore settlement and related court proceedings remain part of the background to the claim. GVK Power & Infrastructure has already recognised the loss of control through a Rs 1,041.58 crore deconsolidation loss.

The next development to watch is whether the requested CIRP extension is granted and whether GVK Energy can address the NCLT’s undisclosed observations through a revised resolution process. The filing gives no timetable, revised plan or creditor recovery estimate, leaving both the treatment of the Phoenix ARC claim and the financial consequences of the CIRP unresolved.