The NCLT has directed for initiation of insolvency proceedings against the company.
The tribunal has also directed for the appointment of interim resolution professional (IRP) to take over the management and operations of Gensol Engineering.
In April, IREDA had initiated an internal review with regards to its exposure to Gensol Engineering and the issues surrounding its promoters and associate companies.
The company filed a complaint with the Economic Offences Wing (EoW) against Gensol over falsified documentation, clarifying that they did not issue the letters referred to. IREDA also classified Gensol’s account as one “under stress” but is yet to classify it as an “NPA”.
IREDA said the promoters of Gensol diluted their shareholdings without approval of lenders, constituting a breach of contract, therefore prompting the company to seek legal recourse and file a complaint with the EoW.
On May 14, IREDA filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Gensol, citing a default of ₹510 crore.
Section 7 of the IBC empowers financial creditors to initiate the Corporate Insolvency Resolution Process (CIRP) against a company that has defaulted. This process begins with an application to the NCLT once a default is established.
Shares of Gensol Engineering Ltd were down 2% at ₹49.38 apiece at 12.25 pm on Friday, June 13. The stock has declined 93.6% this year, so far, while shares of IREDA are down close to 4% at ₹168.93.
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