NCLAT Permits BGR Energy Directors to Proceed with Rights Issue for Restructuring

Authority: National Company Law Appellate Tribunal (NCLAT) Chennai Bench

Order Date: October 7, 2026

Case Overview

This interim application (IA No.1554/2026) was filed by Arjun Govind Raghupathy, the suspended director of corporate debtor BGR Energy Systems Ltd., pending his main appeal (Company Appeal (AT) (CH) (Ins) No. 252/2026) challenging the order admitting the company to the Corporate Insolvency Resolution Process (CIRP). The CIRP was initiated on April 17, 2026, at the instance of a financial creditor. On April 30, 2026, the NCLAT had suspended the CIRP admission order. The appellant contended that the company, an EPC business, was successfully operating and had begun negotiations with its principal financial creditor, who holds close to 97% of the voting share in the Committee of Creditors (CoC). A Master Restructuring Agreement was signed between the corporate debtor and this financial creditor on October 5, 2026. The restructuring strategy involved a substantial infusion of money through equities, necessitating an increase in the company's authorized share capital followed by a rights issue. The financial creditor had stipulated a tight timeline for this process, requiring it to start on October 9, 2026, and conclude by December 31, 2026. The appellant sought a set of directions from the tribunal to allow the company's board to undertake the necessary corporate actions, which are typically restricted during the suspension of the CIRP order.

The appellant's counsel, Mr. P.S. Raman, outlined that meeting the restructuring requirements was a step towards eventually adopting the route under Section 12A of the Insolvency and Bankruptcy Code (IBC), which provides for the withdrawal of a CIRP application. The counsel for the financial creditor (Respondent No. 1, National Asset Reconstruction Company Ltd.), Mr. Srinath Sridevan, concurred with this statement.

Final Outcome

The NCLAT bench, comprising Justice N. Seshasayee (Member-Judicial) and Jatindranath Swain (Member-Technical), granted specific interim reliefs to the appellant. The tribunal permitted the Board of Directors of BGR Energy Systems Ltd. to:

  • Convene and hold meetings of the Board and its members.
  • Increase the authorized share capital in accordance with Section 61 of the Companies Act, 2013, and make consequential alterations to its Memorandum of Association.
  • Undertake a rights issue of equity shares in accordance with Section 62(1)(a) of the Companies Act, 2013, and the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. This includes the issuance of the letter of offer, allotment, listing of shares, and making requisite filings with SEBI, BSE, NSE, and other authorities.
  • Execute and file all requisite e-Forms and statutory filings under the Companies Act, including Forms SH-7, MGT-14, and PAS-3.

The tribunal also directed the Interim Resolution Professional (IRP), within three days of receiving the order, to:

  • File the NCLAT's order dated April 30, 2026, and the present order with the Registrar of Companies, Vijayawada.
  • Intimate the Insolvency and Bankruptcy Board of India (IBBI).
  • Take all steps to remove the association of his digital signature with the corporate debtor on the MCA21 portal and restore the association of the digital signatures of its directors and company secretary.
  • Hand over all MCA21 login credentials, records, and effects of the company to the Board of Directors.

The main appeal was listed for further hearing on November 16, 2026. The practical consequence is that the management of BGR Energy has been temporarily empowered to execute a critical capital restructuring plan outside the strict confines of the CIRP, with the ultimate aim of settling with the financial creditor and withdrawing from insolvency proceedings.

Topics: Corporate Restructuring, Insolvency Law, Capital Raising