Reliance Power on Wednesday said the Export-Import Bank of the United States has filed an insolvency application against the company under Section 7 of the Insolvency and Bankruptcy Code (IBC), alleging default of a guaranteed debt of $165.41 million linked to its subsidiary, Samalkot Power Ltd.
“We wish to inform you that Export-Import Bank of the United States (US Exim) has filed an application under Section 7 of IBC, 2016 against the Company alleging default of debt (net debt US$ 165.41 mn) by Samalkot Power Limited (SPL), a subsidiary, guaranteed by the Company,” said Reliance Power in its exchange filing.
In a regulatory filing, the power producer said the US Exim Bank has moved the National Company Law Tribunal (NCLT), claiming default by Samalkot Power, whose obligations were guaranteed by Reliance Power. The company, however, said the claim is being contested and is not legally tenable.
Reliance Power pointed out that the dispute is already sub judice, as Samalkot Power had initiated arbitration proceedings last year before the London Court of International Arbitration against US Exim Bank and Citibank N.A., the facility agent, as per the terms of the Amended and Restated Credit Agreement dated June 28, 2019 read with marketing agreements executed among others, between, US Exim Bank, Samalkot Power Limited and the marketing consultants, on the ground that debt is not due as on June 30, 2025 under these agreements.
The arbitration was filed on the grounds that the debt had not fallen due as of June 30, 2025, and therefore, there was no default.
“Since the debt has not fallen due and there is no default, the corporate guarantee provided by Reliance Power cannot be invoked,” the company had earlier communicated to the lenders, it said.
In its latest disclosure, Reliance Power said it has been advised that the insolvency application filed by US Exim Bank will be “appropriately contested” and that the company will take all necessary legal steps to protect its interests.
