Corporate guarantor Reliance Power Ltd. is facing an insolvency petition from CFM Asset Reconstruction Private Ltd. following an alleged default by the company’s subsidiary.

CFM filed an application under Section 7 of the Insolvency & Bankruptcy Code against the company on 11 June, the Indian power producer said in a stock exchange announcement.

CFM alleges default of 3,901.59 crore rupees ($467 million) as on 17 August 2023 toward corporate guarantees given by the company against the borrowings of its unit Vidarbha Industries Power Ltd.

In October 2023, Reliance Power said the lender CFM and security trustee Axis Trustee Services Ltd. invoked the corporate guarantee allegedly given by the company after Vidarbha Industries defaulted in payment of dues to its lenders.

The company had said the assets of the subsidiary will be sufficient to meet the debt.

Following the latest development, the Mumbai-based Reliance Power said it has proposed a one-time settlement to CFM and will take all appropriate steps to protect its interest in the matter.

Note: $1 = 83.5715 Indian rupees

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India Watch List For Wednesday - June 5