Aban Offshore's OTS Plan Thwarted by NCLAT; Appeal to Proceed on Merits

The National Company Law Appellate Tribunal (NCLAT) in Chennai has rejected Aban Offshore Limited's One Time Settlement (OTS) proposal, meaning the company's case will now proceed to a full appeal. The Corporate Insolvency Resolution Process (CIRP) will continue under a newly appointed Resolution Professional.

Today's Ruling

The tribunal stated there was no possibility of settlement based on the plan submitted by the company.

As a result, the company's appeal will now be heard on its legal merits.

A new Resolution Professional (RP) has been appointed for Aban Offshore. The company must amend its appeal filings to formally include the new RP.

The next hearing for the company's appeal is set for April 10, 2026.

Why This Matters

This rejection means Aban Offshore cannot resolve its financial obligations through a simple One Time Settlement. The Corporate Insolvency Resolution Process (CIRP) will continue as the company pursues its case legally.

This prolongs uncertainty for the company, its creditors, and shareholders regarding its final financial standing and future operations.

The Backstory

Aban Offshore has faced severe financial difficulties for years, characterized by persistent losses, declining revenues, and significant debt.

The company is currently undergoing CIRP, which was initiated by the National Company Law Tribunal (NCLT) on September 1, 2025, after a default petition from Punjab National Bank.

Auditors have previously expressed concerns about its ability to continue as a going concern, and its balance sheet reveals a deeply negative net worth.

The company had previously settled an insolvency case with Central Bank of India through an OTS in August 2022.

What Changes Now

• The One Time Settlement route for Aban Offshore's financial obligations is now closed.
• The company's future now depends on the legal arguments in its appeal, rather than a negotiated settlement.
• The Corporate Insolvency Resolution Process (CIRP) will continue with the newly appointed Resolution Professional.
• Shareholders face ongoing uncertainty about potential dilution or the final outcome of the resolution process.

Risks to Watch

• Further delays in legal proceedings could occur if the company fails to promptly amend its appeal filings to include the new Resolution Professional.
• The inherent uncertainty of a legal appeal, which could lead to outcomes less favourable than a negotiated OTS.
• The company's severe financial distress, negative net worth, and high debt levels remain critical factors.

Peer Comparison

Aban Offshore operates in the offshore drilling services sector, competing with major players like ONGC and Reliance Industries, alongside smaller firms such as Dolphin Offshore Enterprises and Jindal Drilling & Industries.

However, Aban's ongoing CIRP and critical financial state make direct performance comparisons with healthier peers, such as HPCL or ONGC, difficult.

Context Metrics

• Consolidated Net Loss was ₹307.44 crore in Q2 FY26.
• Consolidated Net Loss widened to ₹2,528.12 crore in Q1 FY26.
• ₹281 crore in Non-Convertible Redeemable Preference Shares, issued in 2014, remain unredeemed as of April 2, 2026.

What to Track Next

• The company's compliance in amending its appeal filings to include the new Resolution Professional.
• The proceedings and outcome of the NCLAT hearing on April 10, 2026.
• Progress of the Corporate Insolvency Resolution Process (CIRP) and any emerging resolution plans.
• Any further disclosures regarding the company's liabilities, including unredeemed preference shares.