Abandonment Of Projects – Promoters' Responsibility Or Not?

Typically, one of the key elements of a project financing structure is a special purpose project company ("Project Company" or "SPV") with no business antecedents, which is set up with the sole aim of developing and implementing the project being housed in it. This structure for project finance is not new, and is designed to ensure bankruptcy remoteness as also no (or limited) recourse to the promoters.

Historically, the promoter's liability with respect to the project being set up by the Project Company was limited in view of the limited role promoters played in the day to day functioning of the Project. Gradually, from a regulatory perspective and to address, inter alia, changing dynamics of the economy, mismanagement of the accounts of the Project Company by the promoters and other discrepancies, the participation of/recourse to the promoters has increased.