NCLT directs Swan Energy to make upfront payment for Reliance Naval

The Ahmedabad bench of NCLT has asked Swan Energy, the firm that had won the bid to buy Reliance Naval and Engineering Ltd in an insolvency proceeding, to make the upfront payment it had proposed in the resolution plan, sources said.

Swan Energy is yet to make the upfront payment of around Rs 250 crore as proposed in the resolution plan, even as the second extended deadline ended on September 14.

The company has once again approached the NCLT seeking an unprecedented third extension of two months.

Sources said, the Ahmedabad bench of NCLT heard Swan Energy’s plea on October 5, and directed the company to make the payment as proposed in the resolution plan, before it could consider its application for a third extension.

The next hearing in this matter is scheduled on November 22.

Swan Energy couldn’t be immediately reached for comments.

As per the resolution plan approved by the NCLT Ahmedabad, Swan Energy was to make an upfront payment of Rs 293 crore to the lenders of RNEL by March 23, 2023, but on Swan’s plea this deadline was extended to July 23, 2023.

As the company failed to arrange funds for making the upfront payment within the extended deadline, then it again approached the NCLT Ahmedabad to seek a second extension.

On August 1, NCLT granted Swan a second extension of 45 days, which ended on September 14.

The company has now filed a fresh application in the NCLT seeking a third extension of two months.

Swan Energy, alongwith Hazel Mercantile, was the successful resolution applicant for Reliance Naval’s shipyard in Gujarat. Their resolution plan of Rs 2,133 crore was approved by the NCLT, in December 2022.

The lenders were supposed to receive Rs 293 crore towards the upfront payment by March-end, but even after 10 months lenders have not received an upfront payment from the consortium.

The consortium has so far paid around Rs 50 crore on the directions of the NCLT to keep the RNEL as a going concern.