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  1. Huge write-off: Banks to take 92% haircut in Adhunik Metaliks case

Huge write-off: Banks to take 92% haircut in Adhunik Metaliks case

Lenders to Adhunik Metaliks (AML) will take a haircut of around 92% and settle for Rs 410 crore against their outstanding dues of Rs 5,370 crore after the Kolkata bench of the National Company Law Tribunal (NCLT) on Tuesday approved the resolution plan submitted by UK-based Liberty House.

By: | Kolkata | Updated: July 18, 2018 5:31 AM
This is the third large company to be resolved under the Insolvency and Bankruptcy Code (IBC) after Bhushan Steel and Electrosteel Steels.

Lenders to Adhunik Metaliks (AML) will take a haircut of around 92% and settle for Rs 410 crore against their outstanding dues of Rs 5,370 crore after the Kolkata bench of the National Company Law Tribunal (NCLT) on Tuesday approved the resolution plan submitted by UK-based Liberty House.

This is the third large company to be resolved under the Insolvency and Bankruptcy Code (IBC) after Bhushan Steel and Electrosteel Steels. In the case of Bhushan Steel, bankers were fortunate to get away with a haircut of only 37%; the haircut for Electrosteel Steels was a steep 60%.

The bench of justice Jinan KR said on Tuesday, “…the revival plan of the company in accordance with the approved resolution plan shall come into force with immediate effect.” Liberty House Group, in a statement, said it was ready to complete all the activities and start reviving Adhunik Metaliks, the flagship company of the Adhunik Group.

Notably, the committee of creditors of AML had approved Liberty House’s resolution plan with an overwhelming majority of 99.94% on July 5, the last day of the extended timeline for the corporate insolvency resolution process.

There were only two resolution applicants for the steel manufacturing company — Liberty House, part of the Sanjeev Gupta-led GFG Alliance, and Maharashtra Seamless of the DP Jindal Group. Liberty House was identified as the highest bidder (H1) by the creditors, while the plan of Maharashtra Seamless was rejected for offering lower than the liquidation value.

Commenting on the NCLT’s approval on Tuesday, GFG executive chairman Sanjeev Gupta said, “We have important ambitions for India and approval to acquire Adhunik is a milestone on our path towards implementing our vision for sustainable steel production and downstream manufacturing in the country.”

AML has an integrated steel plant at Odisha’s Sundergarh. However, currently the plant is not operational due to non-availability of power. The company, incorporated in 2001, is engaged in the production of a wide variety of special steel of standard quality for different applications such as automotive, engineering, oil and gas, telecom, defence, power, railways and construction industries.

Significantly, the NCLT had approved the resolution plan submitted by Liberty House for Zion Steel, another Adhunik Group company, on July 10. According to sources, under the composite plan for both Adhunik Metaliks and Zion Steel, Liberty House has offered to pay Rs 425 crore to the financial creditors. Adhunik Metaliks owes as many as 18 financial creditors, led by the State Bank of India (SBI), Rs 5,370 crore. “This amount includes corporate guarantee provided by AML for other group companies,” sources told FE.

Apart from SBI, lenders to AML are Punjab National Bank, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, Bank of Baroda, Corporation Bank and SREI Infrastructure Finance, among others. Bankruptcy petitions against AML, Zion Steel and another Adhunik Group company Orissa Manganese & Minerals (OMML) were admitted by the Kolkata bench of the NCLT in August last year.

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