The Chandigarh bench of the National Company Law Tribunal (NCLT) will hear the appeal of the lenders of Amtek Auto seeking action against the UK-based Liberty House Group (LHG) on day-to-day basis from January 23.
The Chandigarh bench of the National Company Law Tribunal (NCLT) will hear the appeal of the lenders of Amtek Auto seeking action against the UK-based Liberty House Group (LHG) on day-to-day basis from January 23. As LHG defaulted in implementation of the resolution plan, the Committee of Creditors (CoC) of the debt-ridden Amtek Auto moved the tribunal.
Sources present during the hearing on Wednesday said LHG contended that there was a huge gap between the book value of fixed assets as per Amtek’s balance sheet and liquidation value of fixed assets given by valuer appointed by resolution professional (RP). LHG also said that it could realise the gap only when they visited the plant after the plan was approved by NCLT.
“After hearing the battery of senior counsels representing LHG, NCLT refused to issue notice on LHG application and ordered that the application filed by CoC alleging default by LHG in implementation of the plan will be heard first. It stated that whatever LHG has to say it can say in defence to CoC application,” the source said.
Allegations of LHG were refuted by CoC and RP counsel stating that LHG was fully aware of the book value of assets and it was for LHG to make its own valuation estimate before submitting the plan. The liquidation value of assets is always likely to be lower than book value due to commencement of insolvency. However, in a statement, LHG reiterated its commitment to reviving Amtek provided information memorandum is corrected which is now seen as vitiated by gross misrepresentation.
During the course of the hearing LHG counsels, sources said, claim that Liberty shared how it had suffered on account of misleading liquidation value reports, withholding of information regarding write-offs, and misleading data on sales, profits and capacities of plants, all intended to attract higher bids. They contended that the Amtek Auto matter has impacted the resolutions of Castex and ARGL, two units of Amtek Auto.
LHG was declared the successful bidder for Amtek Auto in late July. The Chandigarh bench approved Liberty’s plan that sought to pay financial creditors Rs 3,225 crore upfront and a fresh infusion of Rs 500 crore into the company for improving operations. The NCLT had on July 24, 2017 admitted Corporation Bank’s plea for initiation of the corporate insolvency resolution process against the Delhi-based auto-component maker. Amtek is one of the dozen companies referred by the RBI to the insolvency court.
Amtek’s total dues to lenders at the time when the company was admitted by the NCLT were Rs 12,603 crore while the liquidation value of its assets was determined at Rs 4,119 crore. However, Liberty failed to meet its commitment as per the approved plan.