The Supreme Court on Wednesday brought to a close the issue of the `2,700-crore takeover of bankrupt auto parts manufacturer Amtek Auto by US hedge fund Deccan Value Investors (DVI), by directing the implementation of the approved resolution plan within four weeks, failing which any lapse “shall be viewed very seriously”.
A bench comprising Justice MR Shah and Justice Sanjiv Khanna said that the approved resolution plan has to be implemented within four weeks, “without fail”, as any further deviation would defeat the object and purpose of the IBC.
On implementation of the approved resolution plan the amount of `500 crore deposited by DVI, the successful resolution applicant, be transferred to the respective lenders/financial creditors as per the approved resolution plan and/or as mutually agreed, it said, while warning that “any lapse on the part of any of the parties in implementing the approved resolution plan with the time stipulated shall be viewed very seriously.” Last week, the judges had given DVI 24 hours to make upfront `500 crore cash payment to Amtek Auto’s lenders.
Noting that the resolution plan was approved by the NCLT in July last year, the apex court said that any further delay in implementation of the approved resolution plan would also defeat the objective of providing specific time limit for completion of the insolvency resolution process, as mandated under Section 12 of the IBC.
Amtek Auto, which owes `12,800 crore to banks and others, featured on the first list of 12 companies that were referred by the RBI for initiating insolvency process in 2017. With a resolution process dating back to July 2017, when Corporation Bank moved the NCLT, Amtek Auto’s is one of the longest cases which is still awaiting resolution under the IBC. DVI was selected in a second bid process after the previous successful bidder, UK-based Liberty House, had backed out citing technical reasons. The apex court had earlier on June 18, 2020 rejected the DVI’s application for withdrawal of the offer and warned it of treating it as its contempt if the firm indulged in such kind of practice.
Earlier this February, the top court had dropped the contempt proceedings initiated by lenders of Amtek Auto against the US-based hedge fund on the condition that it should not raise “force majeure” clause before the National Company Law Appellate Tribunal, which is hearing its appeal against approval granted to its bid for takeover of the auto parts maker.
The apex court had also rejected DVI’s application for rectification, terming it to be “an attempt to renege from the resolution plan which it submitted and to resile from its obligations. This is a devious attempt which must be disallowed”.
Lenders of Amtek Auto wanted to prosecute DVI for trying to wriggle out of its obligation to acquire the bankrupt auto parts maker after emerging as the successful resolution applicant. While DVI’s `12,700 crore bid was approved by NCLT, Chandigarh, on July 9, 2020, the US firm had challenged the same in the NCLAT by invoking the force majeure clause during the pandemic, which had drastically altered the financial calculations that formed the basis for its previous offer. The hedge fund had claimed that its commercial assumptions for the sick manufacturer had been rendered as redundant due to the prevailing market conditions.
