For the first time, a creditor has initiated stringent legal action against Gensol. The company now faces a heightened risk of insolvency proceedings. This action indicates that Gensol's financial situation has become critical, prompting creditors to seek recourse through the courts to recover outstanding dues. In this scenario, the company will need to take necessary steps to repay its debts and restore stability.
Gensol Engineering, entangled in financial irregularities, is now on the brink of bankruptcy. The Indian Renewable Energy Development Agency (IREDA) has filed an insolvency petition against the company with the National Company Law Tribunal (NCLT). This marks the first instance of a creditor taking such b legal action against Gensol. IREDA stated that the company owes ₹510 crore, a loan disbursed for the purchase of electric vehicles, but investigations revealed misuse of these funds.
Gensol's share price, which reached ₹2390 in 2023, has plummeted to just ₹59, and further decline is anticipated following the bankruptcy news. SEBI banned the company and its promoters, the Jaggi brothers, from the securities market last month due to fund misappropriation. Following this, the Jaggi brothers resigned from the company. However, the company appealed to SAT (Securities Appellate Tribunal), which has been disposed of, granting them an opportunity to respond to SEBI's order.
Gensol's Share Price Plummets, Steps Towards Bankruptcy
Gensol Engineering's share price, which reached a record high of ₹2390 in 2023, has fallen to ₹59 in just two years. The prospect of bankruptcy has increased investor anxiety, potentially leading to further share price decline.
Gensol owes approximately ₹510 crore, received from the Indian Renewable Energy Development Agency (IREDA) for the purchase of electric vehicles. Investigations revealed that the company's promoters, the Jaggi family, used these funds for personal expenses and indulgences.
SEBI's Stern Action, Ban on Promoters
Last month, market regulator SEBI banned Gensol Engineering and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market until further notice, citing fund misappropriation and mismanagement.
Following this, the Jaggi brothers resigned from the company on May 12th. Gensol announced on Wednesday that the Securities Appellate Tribunal (SAT) has disposed of their appeal. However, the company has been given an opportunity to respond to SEBI's order.
Strict Decision Following Misappropriation, Company Granted Opportunity to Respond
Under SEBI's interim order, the company and its promoters were banned from the securities market, but the company has now been allowed to respond to this order.
Gensol informed the stock exchange that the Securities Appellate Tribunal (SAT) has disposed of their appeal. The company has been given two weeks to submit its response to SEBI's order.
