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Gensol Admitted Into Insolvency By NCLT Ahmedabad On IREDA Plea

While the company has formally entered the corporate insolvency resolution process, an interim resolution professional is likely to be selected.

<div class="paragraphs"><p>Gensol Engineering has been admitted to insolvency on IREDA's plea. (Photo source: Gensol Engineering)</p></div>
Gensol Engineering has been admitted to insolvency on IREDA's plea. (Photo source: Gensol Engineering)

The Ahmedabad bench of the National Company Law Tribunal on Friday admitted Gensol Engineering Ltd. into insolvency on a plea filed by the Indian Renewable Energy Development Agency Ltd.

While the company has formally entered the corporate insolvency resolution process, an interim resolution professional is likely to be selected from the Insolvency and Bankruptcy Board of India panel.

However, a detailed order on the case is not out yet.

Gensol's troubles began on April 15, when the Securities and Exchange Board of India barred promoters Anmol Singh Jaggi and Puneet Singh Jaggi from accessing the securities market.

The markets regulator also prohibited them from holding any key managerial roles, following findings that funds had been diverted in a loan-financed electric vehicle purchase scheme.

According to SEBI’s investigation, Gensol raised Rs 975 crore in loans to acquire 6,400 electric vehicles but purchased only 4,704 units for Rs 567.73 crore. The regulator found that more than Rs 200 crore remained unaccounted for, triggering concerns about fund misuse.

Credit rating agencies ICRA and Care Ratings downgraded Rs 2,050 crore of Gensol’s debt to default status in February. This included over Rs 1,640 crore in long-term borrowings and more than Rs 400 crore in short-term debt.

When the regulator called upon them to explain the sudden downgrade, it was revealed that the company submitted fabricated debt servicing conduct letters from state-run lenders IREDA and Power Finance Corp.

The credit rating agencies learnt from the two financers later that no such conduct letters were issued to Gensol by them.

Despite defaults beginning as early as December 2024, the company falsely assured rating agencies that it was regular in its payments.

Furthermore, Gensol has been asked to hold the stock split it announced, and the regulator has directed the appointment of a forensic auditor to examine its books of accounts and those of related parties.

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