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Infrastructure project finance is among the most complex recovery scenarios in Indian banking law. Projects typically involve: a Special Purpose Vehicle (SPV) borrower; a concession agreement with a government counterparty (NHAI, State PWD, an airport authority, a state Discom); a lender consortium with multiple banks/NBFCs/DFIs; an EPC contractor and sub-contractors with payment claims; equipment financiers; and frequently O&M contractors with separate cash-flow claims. When the project becomes an NPA, recovery counsel must navigate this multi-party landscape.
Common scenarios: (a) Highway PPP project default where toll-revenue projections fail to meet servicing obligations, requiring NHAI termination-payment coordination and lender enforcement against concession-mortgaged rights; (b) Airport concession default where the AAI revenue-share or annual fee creates servicing pressure; (c) Power-generation project default where PPA-payment delays from Discoms create cash-flow stress; (d) Road sub-contractor default where the principal contractor (a project SPV) has under-paid sub-contractors who hold mechanics-lien type claims affecting lender realisation.
The firm's infrastructure practice handles these scenarios. Engagement structure typically requires a partner-led team given the multi-party complexity and the scale of the matters (₹500 crore+ is common in infrastructure project finance).
For PPP projects under HAM (Hybrid Annuity Model), BOT (Build-Operate-Transfer), or TOT (Toll-Operate-Transfer) structures, the concession agreement is the central document. It defines the project SPV's rights, obligations, revenue entitlements, and termination triggers. Lender enforcement against an NPA project requires interpretation of the concession agreement, coordination with the government counterparty (NHAI, State PWD, AAI), and execution of the lender substitute-step-in rights typically negotiated in the concession agreement.
NHAI termination payments are a key recovery driver in highway PPP defaults. The concession agreement's termination compensation formula provides for a payment by NHAI to the SPV (or by the SPV to NHAI, depending on the termination cause and stage of the project). Lender enforcement strategy is designed around capturing the termination payment in the lender's favour through tripartite agreements, escrow arrangements, and direct-payment notices to NHAI.
Airport and port concession defaults follow analogous patterns. The firm advises lender consortiums on concession-agreement enforcement strategy, government-counterparty coordination, and the SARFAESI/DRT/IBC interface for the SPV-borrower's parent obligations.
Infrastructure project receivables to EPC contractors and sub-contractors create a parallel recovery dynamic. Where the project SPV (or the project owner) defaults on payments to the EPC contractor, the EPC contractor may pursue: (a) civil recovery suits or IBC Section 9 references against the SPV; (b) bank guarantee invocation against any performance security held by the SPV; (c) Tribunal references under specific concession-agreement dispute mechanisms; or (d) sub-contractor lien claims against project assets where the sub-contractor has retained mechanics-lien rights.
For lender enforcement, sub-contractor claims can complicate asset realisation. The lender's SARFAESI Section 26E priority generally trumps unsecured creditor claims, but sub-contractor lien claims (where validly perfected) may have specific priority effects. Recovery strategy must account for these claims.
The firm advises both lenders enforcing against project SPVs and EPC contractors with receivables exposure to defaulted projects. This dual-perspective experience helps in designing recovery strategy that anticipates the sub-contractor and EPC dynamics.
Infrastructure project NPA engagements at the firm typically take one of three forms. First, lead-bank engagements for ₹500 crore+ project NPAs where the firm serves as the principal recovery counsel coordinating across consortium lenders, government counterparty, and SPV. Second, member-lender engagements where the firm represents a specific consortium lender within a broader lead-bank-driven recovery. Third, ARC engagements where an ARC has acquired the infrastructure NPA portfolio and seeks specialist enforcement.
For institutional creditors evaluating infrastructure panel counsel, the firm offers a sectoral panel package with project-specific engagement protocols. Initial inquiries to legal@unifiedchambers.com.
NHAI termination payments to the project SPV (or vice versa) are typically the principal recovery realisation in highway PPP defaults. Lender protection is achieved through tripartite agreements between the SPV, NHAI, and the lender consortium that direct termination payments to a lender-controlled escrow, and through hypothecation of the SPV's receivables under the concession agreement. Recovery strategy is designed around capturing the termination payment cleanly.
Yes, subject to the concession agreement's provisions on assignability and substitute-step-in. Most modern PPP concession agreements include lender step-in provisions allowing the lender consortium to substitute a replacement operator on SPV default. Lender enforcement strategy uses these provisions to either replace the SPV or negotiate a termination payment in the lender's favour.
The firm has experience in lender-side coordination with NHAI, AAI, State PWDs, and State infrastructure agencies. Coordination involves submitting representations on the lender's position, coordinating tripartite documentation, negotiating termination-payment treatment, and where necessary pursuing writ-court remedies for government-counterparty inaction.
IBC Section 7 reference may be the optimal recovery channel where the project SPV is a corporate entity, the lender consortium is fragmented, and a Resolution Professional-driven resolution can produce a better outcome than fragmented enforcement. The firm advises on CIRP strategy, CoC representation, resolution-plan evaluation, and parallel SARFAESI/DRT execution alongside CIRP.