Allahabad High Court refuses interim relief to developers of stressed assets

The Allahabad High Court has refused interim relief beyond August 27, 2018, to private power companies against the Reserve Bank of India’s (RBI) circular on stressed assets thereby mandating the initiation of insolvency proceedings by lenders against defaulting projects of companies. Further, the court has asked the central government to decide and take action under Section 7 of the RBI Act within 15 days. It has also asked the high-level empowered committee to submit a framework for under-resolution, resolved and pending stressed assets by September 29, 2018. Following the order, it is estimated that lenders to about 30 stressed power assets – comprising 18 coal-based and 12 hydropower projects – will refer them to bankruptcy courts.