The second round of bidding, lenders' counsel said, has become necessary as LHG has failed to pay up as per the approved resolution plan.
Lenders to Amtek Auto on Thursday sought permission of the National Company Law Appellate Tribunal (NCLAT) to initiate a fresh round of bidding for the bankrupt auto component maker. The UK-based Liberty House Group (LHG) was declared the successful bidder for Amtek Auto in late July.
The second round of bidding, lenders’ counsel said, has become necessary as LHG has failed to pay up as per the approved resolution plan. The second highest bidder, Deccan Value Investors (DVI), was also considering to lower its bid, following Liberty House backing out.
Amtek’s total dues to lenders in July last year was Rs 12,603 crore. The liquidation value of its assets was at Rs 4,129 crore as on July, 2017. LHG’s resolution plan included Rs 3,525 crore upfront payment and Rs 500 crore fresh infusion. DVI reportedly placed a bid of Rs 3,150 crore.
The two-member NCLAT bench, led by its chairperson justice S J Mukhopadhyay, on Thursday said asked DVI and former promoters of the company to file their replies on the CoC’s plea. The bench has scheduled the matter for further hearing on April 22.
The bench has also directed the Committee of Creditors (CoC) not to approve any other plan in the meantime and directed the resolution professional, Dinkar Venkatasubramanian, to ensure that the company remains a going concern.
The Chandigarh bench of the National Company Law Tribunal (NCLT), had in July 24, 2017 admitted Corporation Bank’s plea for initiation of the corporate insolvency resolution process against the Delhi-based auto-component maker. Although 25 potential investors evinced interest initially in buying the firm, Liberty outbid DVI to emerge as the preferred bidder.
However, as LHG failed to implement the resolution plan, lenders moved a petition in the NCLT alleging that the LHG has knowingly contravened the terms of the resolution plan. They also urged the tribunal to allow them a fresh round of bidding.
LHG countered, alleging that there had been a gross misrepresentation/mistake of fresh/irregularities in the information relating to the corporate debtor and the fraud allegedly by the RP, has resulted in the entire CIRP being vitiated.
The Chandigarh bench of the NCLT, on February 13, 2019, rejected the lenders’ plea, saying ‘the instant application for starting the fresh process for resolution of the corporate debtor (Amtek Auto) cannot be accepted. However, in the facts of this case, the CoC should be reconstituted for the purpose of taking a decision on the plan submitted by DVI’.