Mumbai: Chinese construction contractor Sepco Electric Power Construction Co. has initiated bankruptcy proceedings against KSK Mahanadi Power Co. Ltd to recover around 5,230 crore, two people familiar with the development said.

KSK Mahanadi, which operates a 3,600-megawatt (MW) project in Chhattisgarh, is among power firms that have challenged a central bank circular on mandatory insolvency resolution.

“The Chinese engineering, procurement and construction firm has filed a case before the Hyderabad bench of the National Company Law Tribunal (NCLT) on 27 November and the matter came up for the hearing on 30 November," first person aware of the development said. “Lenders comprising approximately 23 banks and institutions, including Power Finance Corp. and Rural Engineering Corp., have approached the tribunal under the Insolvency and Bankruptcy Code," the first person said.

The bench will hear the financial and operational lenders on 19 December.KSK Mahanadi’s dues include around $647.38 million in foreign currency and 709.50 crore, said the person quoted above. Out of this, the admitted default is 2,050 crore, which includes $260.85 million and 249.72 crore.

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