Amtek Auto goes to Liberty House

By: | Published: July 26, 2018 5:49 AM

Lenders to auto-component maker Amtek Auto will have to take a haircut of around 65% and settle for Rs 4,404 crore against their outstanding dues of Rs 12,603 crore after the Chandigarh bench of the National Company Law Tribunal (NCLT) on Wednesday approved the resolution plan submitted by UK-based Liberty House.

amtek, ncltAmtek Auto is the fifth large insolvent company to be resolved under the Insolvency and Bankruptcy Code (IBC) after Bhushan Steel, Electrosteel Steels, Monnet Ispat and Adhunik Metaliks.

Lenders to auto-component maker Amtek Auto will have to take a haircut of around 65% and settle for Rs 4,404 crore against their outstanding dues of Rs 12,603 crore after the Chandigarh bench of the National Company Law Tribunal (NCLT) on Wednesday approved the resolution plan submitted by UK-based Liberty House.

Approving Liberty House’s plan, the adjudicating authority in its 35-page order said, “The resolution professional is directed to forward all the record relating to the conduct of the corporate insolvency resolution process and the resolution plan to the IBBI (Insolvency and Bankruptcy Board of India) and to be recorded on its database.”

As part of its resolution plan, Liberty House has offered to pay Rs 3,225 crore upfront to the financial creditors and proposed to infuse Rs 500 crore for stabilising and improving operations. “The total potential recovery by the financial creditors has been calculated at Rs 4,404 crore,” the order said.

Amtek Auto is the fifth large insolvent company to be resolved under the Insolvency and Bankruptcy Code (IBC) after Bhushan Steel, Electrosteel Steels, Monnet Ispat and Adhunik Metaliks. Amtek Auto was admitted for insolvency proceedings in July last year on a petition filed by Corporation Bank.

Only last week, Liberty House’s resolution plan for Adhunik Metaliks and its group company Zion Steel was approved by the adjudicating authority’s Kolkata bench. Liberty House had offered Rs 410 crore to the financial creditors against their Rs 5,370 crore dues to the company, forcing them to to take a haircut of around 92%.

In the case of Bhushan Steel, bankers were fortunate to get away with a haircut of only 37%; that for Electrosteel Steels was a steep 60%. For Monnet Ispat, it is around 75%.

“Following the NCLT go-ahead for Amtek Auto resolution plan, Liberty House is set for a major automotive growth. It is a very significant moment for Liberty House and GFG Alliance. We are very excited about the opportunity to restore a great Indian business to its rightful position and add a major new asset portfolio to our international network,” Liberty House said in a statement.

In an exchange filing in April 2018, Amtek Auto had communicated that lenders had approved its bid. However, media reports noted the company had defaulted on a payment and was, therefore, not eligible to bid for the company.

Subsequently, Liberty House submitted an affidavit in the NCLT, Kolakata bench, which was adjudicating the Adhunik Metaliks matter, swearing that it was not disqualified as per the amended Section of 29 (A) of the IBC to bid. The resolution professional (RP) for Adhunik Metaliks also certified before the tribunal that Liberty House was not ineligible to submit a resolution plan under Section 29 (A). The RP for Amtek Auto also gave his go-ahead on the issue and “certified that the resolution plan meets the requirements of the Code with 94.20% of the voting share in favour of the resolution plan”.

Liberty House is owned by the UK-based Gupta family. The company is an integrated metals and industrial player specialising in commodities, metals recycling, manufacturing of steel, aluminium and engineering products.

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