FE: Amtek Auto to be wound up on NCLAT order

17 August 2019: The National Company Law Appellate Tribunal (NCLAT) on Friday ordered the liquidation of Amtek Auto, turning down a plea by the lenders for a new round of bidding. The liquidation value for the bankrupt auto components maker, which owes lenders Rs 12,603 crore, is Rs 4,119 crore.

With the 270 days timeline for the corporate insolvency resolution process over, a bench headed by justice SJ Mukhopadhaya on Friday ruled against a second round of bidding.

A consortium of banks led by Corporation Bank had initiated insolvency proceedings against Amtek in July 2017.

The liquidation follows an unsuccessful resolution process for the company. While Liberty House Group had bid Rs 4,025 crore and was declared the successful resolution applicant by the Chandigarh bench of National Company Law Tribunal (NCLT) in July 2018, it backed out of the deal citing inflated values of assets.

The second highest bidder was Deccan Value Investors (DVI), which had offered Rs 3,150 crore. However, once Liberty House had been declared the winner, DVI withdrew its offer.

“….we are not inclined to give any direction as was sought for by the ‘committee of creditors’ nor inclined to exclude any period calling for fresh ‘resolution plan’. More than 270 days having passed, the Adjudicating Authority will pass appropriate order of liquidation, which will be in accordance with law,” justice Mukhopadhaya said in the Friday order.

On June 13, the resolution professional (RP) for Amtek Auto, Dinkar Venkatasubramanian, and the CoC had sought fresh bids for the debt-ridden company after Liberty House Group backed out. This was based on a new information memorandum.

However, he was pulled up by the NCLAT on June 26 with the appellate tribunal saying no new bidders could participate. The NCLAT asked the RP to consider only plans submitted by DVI and others based on the original information memorandum.

The NCLAT also set aside the NCLT Chandigarh’s order referring Liberty House’s U-turn on the binding bid to Insolvency and Bankruptcy Board of India for action.

According to the RP, the average liquidation value of Amtek Auto’s assets was Rs 4,119 crore, including Rs 1,128 crore for fixed assets like plant and machinery. Liberty House’s assessment, however, valued the fixed assets at around Rs 400-500 crore.Amtek is an integrated auto component manufacturer with operations across forging, iron and aluminium casting, machining and sub-assemblies.

The Financial Express reported

FE: NCLAT stays NCLT order to liquidate Adhunik

23 July 2019: The National Company Law Appellate Tribunal (NCLAT) has stayed the order of the Cuttack Bench of the National Company Law Tribunal (NCLT) to liquidate Adhunik Metaliks (AML) after Liberty House Group moved the appellate tribunal against the liquidation order.

Earlier this month, the Cuttack Bench of the NCLT had ordered liquidation of the bankrupt steel maker after cancelling the resolution plan of Sanjeev Gupta-led Liberty House Group, with the UK-based group failing to implement the resolution plan submitted by it for bankrupt AML under the corporate insolvency resolution process (CIRP).

In a stock exchange filing on Monday, AML said, “Liberty House Group preferred appeals before the NCLAT against the liquidation order dated July 9, passed by the adjudicating authority, NCLT Cuttack Bench, in the matter of Adhunik Metaliks.”

In its order dated July 17, the NCLAT said, “Until further orders, operation of the impugned order of liquidation shall remain stayed.”

According to the order, the advocate appearing for State Bank of India (SBI), the lead lender, may file reply affidavit within two weeks. Rejoinder, if any, can be filed within two weeks thereafter. The appellate tribunal has directed to list the matter on August 28. Lenders to Adhunik Metaliks are SBI, PNB, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, BoB, Corporation Bank and Srei Infrastructure Finance, among others.

Earlier, after Liberty House had failed to make the upfront cash payment of Rs 410 crore within the extended timeline to acquire AML, the Committee of Creditors (CoC), led by SBI, had filed an application before the Cuttack Bench of the NCLT to cancel the resolution plan of the LHG stating that it had “committed breach” in implementation of the plan.

In his submission before Justice Madan B Gosavi of the NCLT Cuttack Bench, the counsel for CoC had appealed to revive the CIRP by excluding period vested by LHG by not implementing the resolution plan as the group had not paid the required upfront cash payment to lenders within the stipulated deadline set by the NCLAT. The CoC’s counsel had also requested the Bench to allow them to consider the resolution plan submitted earlier by the H2 bidder, Maharashtra Seamless.

Notably, there had been only two resolution applicants for the debt-ridden steel manufacturing company — Liberty House and Maharashtra Seamless of the DP Jindal Group. LHG had been identified as the highest bidder (H1) by the creditors, while the plan of Maharashtra Seamless had been rejected as it had been offering less value than the liquidation value of the company.

During the hearing by the Cuttack Bench, Liberty House counsel Arvind Kumar Gupta had requested it to give directions to the CoC, the monitoring committee and the managing committee for the corporate debtor to cooperate with them in implementing the resolution plan in proper prospective as per the terms laid down in the plan. The Kolkata Bench of the NCLT had in July last year approved the resolution plan submitted by Liberty House, with lenders agreeing to take a haircut of around 92% and settling for Rs 410 crore against their outstanding dues of Rs 5,370 crore.

The Financial Express reported

ET: NCLT orders liquidation of Adhunik Metaliks, Zion Steel

9 July 2019: Close to two years after getting admitted for insolvency, Kolkata-based Adhunik Metaliks and Zion Steel were ordered to be liquidated by the Cuttack bench of the National Company Law Tribunal (NCLT) on Monday after Liberty House failed to implement its resolution plan.

However, Maharashtra Seamless — which had submitted a revised offer — can still apply to acquire the companies under Sections 230-232 of the Companies Act that deals with mergers and amalgamations, the bench ruled.

The NCLT though rejected a plea by the committee of creditors to be allowed to consider the offer. Maharashtra Seamless was the second-highest bidder for the assets of Adhunik Group of Industries, which has collective debt of more than Rs 5,000 crore and employs over 1,500 workers. Liberty House’s plan was approved in July 2018 but its implementation got delayed.

The delay occurred due to MSTC’s claims which were later rejected by both the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.

However, even after the claims were dismissed, the Liberty House failed to pay the upfront amount of Rs 410 crore, saying the lenders did not issue it an offer letter for equity shares, which made it difficult for the UK-based company to invest funds as per plan.

The NCLT bench said this concern was deliberately raised at a belated stage by Liberty House. “In this case, the situation that has arisen is that successful resolution applicant Liberty House Group is not in (a) position to implement the resolution plan,” said the order. EThas seen the order. “Corporate Insolvency Resolution Process period of 270 days has already been over along back. In such a situation, this authority has no option but to pass order of liquidation of the Corporate Debtor as per Section 33 of Insolvency and Bankruptcy Code, 2016,” the NCLT bench said.

Rejecting the lenders’ appeal to be allowed to consider the Maharashtra Seamless offer, the bench said that in its earlier form the offer was rejected because the capital being infused into the stressed companies was below the liquidation value. “In such a situation, the authority cannot reset the clock back to Day One. I cannot allow the Committee of Creditors to restart the Corporate Insolvency Resolution Period afresh over and again.” Liberty House did not offer any comment.

A source aware of the developments said the banks are reviewing the matter and may contest the NCLT order.

Sumit Binani of Grant Thornton, who was the resolution professional, has been asked to liquidate the company as a going concern. However, the source mentioned above said the company is not a going concern as it has not been operational for the past 14 months. The integrated steel plant has a capacity of 0.45 million tonnes in Odisha which can be increased to 1million tonnes. Zion Steel, which is also located in the premises of Adhunik, has a rolling mill of 0.12 million tonnes.

This is the second company that Liberty House was keen to acquire that has receive a liquidation order. In April, ABG Shipyard was ordered for liquidation after the Sanjeev Gupta-led company — the sole bidder — failed to get its bid approved by the lenders.

The Economic Times reported

BQ: NCLAT Asks Amtek Auto Lenders To Consider Bids Of Deccan Value Investors

26 June 2019: The National Company Law Appellate Tribunal on Wednesday directed the lenders of Amtek Auto Ltd. to consider insolvency resolution plans submitted by Deccan Value Investors and others, based on the original information memorandum inviting bids.

A two-member NCLAT bench, headed by Chairman Justice SJ Mukhopadhaya, slammed Amtek Auto’s committee of creditors for issuing fresh information memorandum inviting new resolution plans. “We have not allowed the committee of creditors or resolution professional to issue fresh information memorandum or invitation calling for more applications,” said NCLAT.

On June 13, resolution professional of the debt-ridden auto components maker had issued a fresh information memorandum inviting fresh submission of resolution plans.

The CoC has received 5-6 fresh expressions of interest after NCLAT’s May 20 order.

Clarifying its earlier order passed on May 20, NCLAT asked CoC to consider the bids submitted on the basis of the previous information memorandum. “In view of such interim order, the CoC is required to consider the resolution plan, if any, filed by any persons including the one submitted by Deccan Value Investors,” said NCLAT.

Deccan Value Investors was the second highest bidder for Amtek Auto with a Rs 3,150 crore offer. NCLAT also allowed Deccan Value Investors to modify and improve its offer after negotiation with the CoC.

“However, it will be open to the committee of creditors to negotiate and ask the resolution applicants to improve their plan in terms of the original information memorandum,” said NCLAT.

Earlier, U.K.-based Liberty House was chosen as the highest bidder for Amtek Auto but it later backed out and refused to furnish the bank guarantee for the acquisition.

The BloombergQuint reported

FE: Adhunik Metaliks: NCLT reserves order on lenders’ petition to restart CIRP

20 June 2019: The Cuttack bench of the National Company Law Tribunal (NCLT) has reserved its order on a plea by lenders seeking reinitiation of the corporate insolvency resolution process (CIRP) against bankrupt Adhunik Metaliks (AML). The plea was filed after UK-based Liberty House allegedly failed to make the upfront cash payment of Rs 410 crore even within the extended timeline to acquire the debt-ridden company.

After hearing arguments from counsels for the committee of creditors (CoC) for AML and Liberty House, Justice MB Gosavi on Tuesday reserved his order on all applications, including reinitiation of the CIRP process for the steelmaker.

Earlier, in his submission before the tribunal, the CoC counsel had appealed to re-initiate the CIRP process as Sanjeev Gupta-led Liberty House had not paid the required upfront cash payment of Rs 410 crore to lenders by April 14, the stipulated deadline set by the National Company Law Appellate Tribunal (NCLAT), for acquisition of AML.

In response, Liberty House’s counsel had said the group would need more time to make the payment as regulatory approvals were still pending for Adhunik Metaliks under the insolvency resolution process.

Lenders to Adhunik Metaliks are SBI, PNB, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, Bank of Baroda, Corporation Bank and SREI Infrastructure Finance, among others.

The Kolkata bench of the NCLT had in July last year approved the resolution plan submitted by Liberty House, with lenders agreeing to take a haircut of around 92% and settling for Rs 410 crore against their outstanding dues of Rs 5,370 crore. There were only two resolution applicants for the debt-ridden steel manufacturing company — Liberty House and Maharashtra Seamless of the DP Jindal Group. LHG was identified as the highest bidder by the creditors, while the plan of Maharashtra Seamless was rejected as it was offering less value than the liquidation value of the firm.

Notably, the LHG had earlier failed to meet the deadline for payment under CIRP within the stipulated time for Amtek Auto, prompting the Chandigarh bench of the NCLT to allow its lenders to go for a fresh round of bidding.

Last month, the Insolvency and Bankruptcy Board of India (IBBI) filed a criminal complaint against Liberty House Group for withdrawing after successfully bidding for Amtek Auto.

The Financial Express reported

ET: Amtek Auto reopens bankruptcy resolution process; invites fresh bids

14 June 2019: Cash-strapped company Amtek Auto started a fresh round of bidding process on Thursday, almost after two years of its first bankruptcy proceeding.

Headquartered in New Delhi the company is an auto and non-auto component manufacturer with operations across forging, aluminum casting, machining and sub-assemblies.

In a regulatory filing, the company said that prospective bidders can submit their resolution plans by 6 pm on June 28.

The move comes after the Chandigarh bench of the National Company Law Tribunal (NCLT) in February allowed Amtek’s creditors to start the resolution process from scratch.

Amtek Auto was one of the 12 large corporate defaulters that the Reserve Bank of India had identified in June 2017 for insolvency proceedings. It was dragged to the bankruptcy court by state-run Corporation Bank in July 2017. The company owes its financial creditors about Rs 12,300 crore. It also owes about Rs 206 crore to its operational creditors.

In March last year, the UK-based metals group Liberty House had emerged as the highest bidder for Amtek, winning a resolution anount of Rs 4,100 crore. Liberty House had offered Rs 3,225 crore affront and fresh infusion for stabilising and improving operations to the tune of Rs 500 crores.

Besides Liberty, Amtek had attracted a bid from US-based employee-owned hedge fund sponsor Deccan Value Investors.

However, Amtek’s resolution professional Dinkar Venkatasubramanian questioned Liberty’s suitability to buy the auto components maker because it itself owed money to creditors. While the NCLT approved Liberty’s bid, the UK-based company failed to honour its payment commitments.

The Economic Times reported

ET: IBBI seeks to penalise ‘flippant’ bidders to prevent fraud at bankrupt companies

2 May 2019: The Insolvency and Bankruptcy Board of India (IBBI) is seeking to penalise ‘flippant’ bidders and managers of stressed assets to help quicken the recovery of banking funds locked in bad loans and prevent fraud at companies put into administration.

After a Liberty House plan for a stressed automotive asset didn’t result in payments, IBBI has filed nearly a dozen cases in the past two months to punish fraud linked to bankruptcies, two people with direct knowledge of the matter told ET. An email sent to IBBI seeking its comments remained unanswered until the publication of this report.

Likely offences include malicious initiation of insolvency proceedings, wilful concealment of company properties, misconduct by any officer of the borrower during the resolution, and the administration fraud.

Penalties include jail terms ranging from one to five years, and fines up to Rs 1 crore. “Speedy action by IBBI will act as a deterrent,” said Anil Goel, founder of AAA Insolvency Professionals LLP. “We have experienced various cases of planned insolvency where the property of the cor- porate debtor is concealed or removed or taken away for personal benefits before the commencement of the insolvency process.”

There are 28 special courts in India dealing with prosecutions in insolvencies. These dedicated courts established three years ago, will only hear cases against alleged offences under the Insolvency and Bankruptcy Code (IBC).

The objective behind setting up these special courts was the speedy disposal of cases. Ever since IBC was introduced in December 2016, specific provisions stipulating punishment have not been used so far. Last year, London-based Liberty House had won the race to acquire Amtek Auto for Rs 4,400 crore. But it failed to implement the resolution plan and make any payments to banks, prompting creditors of the distressed company to take legal action.

The Economic Times reported

ET: Liberty misses deadline to pay Rs 410 crore bid money for Adhunik Metaliks

16 April 2019: Liberty House Group has failed to pay the Rs 410-crore offer money for stressed steel company Adhunik Metaliks within the deadline set by the bankruptcy court. The UK-based conglomerate cited lack of statutory approvals for the delay, but some people close to lenders said it just could not secure funding.

The National Company Law Appellate Tribunal had on March 15 dismissed a claim by state-owned MSTC that it be paid dues of Rs 108 crore as part of the resolution plan to clear the final hurdle in the way of Liberty House to make the deal payment that it was originally supposed to make in October last year. NCLAT had also asked the British firm led by India-born Sanjeev Gupta to pay the deal amount within 30 days. That deadline ended on Sunday.

“We are working on procuring statutory and regulatory approvals which are a vital part of the implementation plan,” Liberty House said in a statement confirming missing the deadline.

A person close to Liberty House said a few approvals that were required to be sought from the stock exchanges had not been received yet. The approvals would have been in the nature of allowing Liberty House to infuse cash in the Kolkata-based steel maker by buying shares and debentures, the person said.

However, a person close to the lenders said, “It seems that the company is having issues securing funding from abroad.”

The monitoring committee set up to oversee Adhunik’s sale had on April 5 approved issuance of shares and debentures worth .`40 crore to Liberty House in line with its resolution plan.

The way forward will now be decided by the National Company Law Tribunal (NCLT) on the next hearing in Kolkata on April 30.

This is not the first time that Liberty House has failed to meet the deadline for payment after emerging the successful resolution bidder for a bankruptcy-facing company. Earlier, it failed to bring in the money within the stipulated time for Amtek Auto, prompting NCLT to allow its creditors to go for a fresh round of bidding.

The London-based takeover tycoon Gupta’s firm was also the sole bidder for ABG Shipyard. It had also emerged the successful bidder for Castex Technologies, a debtridden subsidiary of Amtek Auto. Liberty House has not managed to take over any of these firms.

The Economic Times reported

ET:

5 April 2019: Lenders to Adhunik Metaliks have issued shares and debentures worth Rs 40 crore to Liberty House as a first step for the UK-based company to take control of its first-ever asset in India after protracted litigation.

The company’s monitoring committee has approved issuing 20 million equity shares of Rs 10 each and 20 million compulsory convertible debentures (CCDs) of Rs 10 each in line with the resolution plan approved by the NCLT, Kolkata bench on July 17, 2018, Adhunik Metaliks told the BSE. 

The move comes after an NCLAT order last month refused to recognise a Rs 108-crore outstanding claim by MSTC, an operational creditor to Adhunik, as the “resolution process cost”. 

The claim was the reason behind Liberty House’s refusal to pay the Rs 410-crore it had offered for Adhunik even after the plan was approved in July last year. 

It had argued that it was not liable to pay the amount as part of the resolution plan. 

With MSTC’s claim set aside, the same NCLAT order has given LHG time until April 14 to pay the entire upfront amount of Rs 410 crore it offered for Adhunik. 

The next step will likely be the de-listing of the company, said a person aware of the development. 

Sanjeev Gupta-led Liberty House has in the past few years acquired several distressed assets in Europe, UK and Australia. But in India, it has taken long to succeed in an acquisition. 

Eyeing the bankruptcy code as an opportunity to grab a foothold in India, Gupta had put in bids for many assets — Amtek Auto and its subsidiaries Castex and ARGL, ABG Shipyard, Bhushan Power and Steel and Adhunik Metaliks. 

While in ABG Shipyard and BPSL, its bids fell short of making the cut, its refusal to pay the promised sum of money for Amtek Auto and its subsidiaries citing issues in the valuation of the businesses had been viewed with scepticism by lenders. 

The bankruptcy court in Chandigarh found its approach “casual” and has ordered re-bids for these companies. 

Adhunik Metaliks will be one of the first few cases in India under the IBC where the acquirer will revive a closed unit. It owes Rs 5,371 crore to lenders, who are taking a haircut of almost 92 per cent by accepting Liberty House’s offer.

The Economic Times reported

TTI: Liberty gets last call to clear Adhunik dues

29 March 2019: Liberty House Group plans to meet the 30-day deadline, set by the appellate company tribunal, to cough up a Rs 410-crore upfront payment to the lenders of bankrupt steel maker Adhunik Metaliks Ltd.

The London-based company has been provided this “one opportunity” by the National Company Law Appellate Tribunal to close the transaction by April 14, failing which the lower tribunal may pass an “appropriate order in accordance with law”. Sources close to Liberty said the company was “working hard” to complete the deal as directed by the court. 

Sanjeev Gupta had made audacious bids for several bankruptcy facing companies such as Amtek Auto and ABG Shipyard. Even though it was selected as successful resolution applicants in several of them, the company has not been able to cross the line in any case.

The March 15 order of the NCLAT, which also rejects the plea of MSTC that demanded Rs 108.36 crore as “resolution process cost”, provides a window now to Liberty to start a well-sized metal business in India.

Shifting timetable

According to a previous order of NCLT Calcutta, Liberty House had to make an upfront cash payment of Rs 410 crore to the secured financial creditors, who collectively had a Rs 5,371.23-crore claim on Adhunik, by September 12.

However, the company deferred the payment and sought time from the Calcutta bench, as it wanted a “clean asset”, referring to the legal challenge mounted by MSTC.

State-run MSTC was listed as an operational creditor having a claim of Rs 108.36 crore on Adhunik. It had supplied iron ore, coal and other raw materials to the debt-laden company.

MSTC had objected to Liberty’s resolution plan approved by the CoC. The UK company is paying Rs 30 crore against a combined claim of Rs 273.27 crore by the operational creditors.

While the legal wrangle ensued, the committee of creditors, led by the State Bank of India, informed the Calcutta tribunal it was willing to start the resolution afresh. 

The creditors showed a letter from the second-highest bidder Maharashta Seamless, agreeing to take over Adhunik. 

The matter finally landed at the NCLAT which rejected the MSTC plea and allowed Liberty time to pay the dues. It is not yet known if MSTC will challenge the order at the Supreme Court.

The Telegraph India reported