After Adhunik Metaliks (AML) received additional time to complete the ongoing insolvency resolution process, lenders are now negotiating with UK-based Liberty House — the highest bidder — for exploring opportunity to raise its offer for the bankrupt company. Last week, the Kolkata bench of the National Company Law Tribunal (NCLT) had ordered exclusion of 20 days from the mandated 270-day deadline under the corporate insolvency resolution process (CIRP) for the debt-laden steelmaker. There were only two resolution applicants — Liberty House and Maharashtra Seamless of the DP Jindal Group. The committee of creditors (CoC) of AML already identified Liberty House as the highest bidder (H1), while the plan of Maharashtra Seamless was rejected as it was offering less value than the liquidation value of the company.
“Lenders to the company are currently negotiating with Liberty House in order to explore the opportunity to improve its offer,” a source close to the development told FE. Lenders to the bankrupt company, a flagship of the Adhunik Group, are State Bank of India, Punjab National Bank, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, Bank of Baroda, Corporation Bank and SREI Infrastructure Finance, among others. AML and Zion Steel put together, Liberty House’s current offer stands around Rs 600 crore. Zion Steel, an Adhunik Group company, is also undergoing an insolvency resolution process, where Liberty House is the highest bidder (H1). The CoC meet to consider approving Liberty House’s revised resolution plan is likely to take place later this month, said the people cited above.
When contacted, a spokesperson of the UK-based group declined to comment as the insolvency resolution process is ongoing. Sumit Binani, the resolution professional (RP) of the insolvent companies, was not available for a comment. Significantly, in case of Adhunik Metaliks, SBI, PNB and ICICI Bank together are exercising over 60% voting rights as part of CoC. For AML, the stipulated deadline under the CIRP had expired on April 29, and during this period no resolution plan was approved by its CoC. Binani had urged NCLT to exclude around 20 days from the stipulated 270-day deadline so that in this additional time the CIRP process could be considered.
“A lot of time has been lost while negotiating with Liberty House. The company has taken time to clarify its stand as an eligible resolution applicant under Section 29A of the IBC,” RP’s counsel Sidhartha Sharma told a division bench of the tribunal on May 11. Passing an order on June 15, the division bench of the NCLT said, “a period of 20 days stands excluded from statutory period of 270 days and resolution professional is allowed to consider the plans before him within period of 20 days from the date of this order and submit them for approval of this bench.” The tribunal is scheduled to hear the matter on July 2. Adhunik Metaliks, an alloy, special and construction steel manufacturing company, has an integrated steel plant at Odisha’s Sundergarh. AML also has ferro alloys division, DRI division, power plant and associated facilities.
Bankruptcy proceedings against AML, its subsidiary Orissa Manganese & Minerals (OMML), and group company Zion Steel were admitted by the Kolkata bench of NCLT in August last year. SBI, which leads the consortium of lenders to the companies, had in July last year filed insolvency petitions over non-payment of loans worth Rs 812 crore by AML and Rs 940 crore by OMML. The bank had also claimed dues from Zion Steel, as it was a co-obligator to the loans disbursed to AML and OMML under the provisions of the master restructuring agreement and the common loan agreement signed in March 2014.