The National Company Law Tribunal (NCLT) has approved the resolution plan of Liberty House UK, part of Sanjeev Gupta’s global GFG Alliance, to take over troubled Amtek Auto under the Insolvency and Bankruptcy Code.
“Liberty got NCLT go-ahead for Amtek Auto resolution plan. This is a very significant moment for Liberty house and GFG alliance. We are very excited about this 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. Amtek Auto is the 5th of the 12 large stressed accounts — identified by the Reserve Bank of India — to get resolved under the bankruptcy proceedings. Amtek Auto was admitted for insolvency on July 24, 2017. US-based Deccan Value and UK-based Liberty House were the two bidders for its assets.
The committee of creditors (CoC) in March 2018 identified Liberty House as the highest bidder. However, later that month, lenders to ABG Shipyard Ltd were informed that Liberty House — which was the sole bidder for the company — had defaulted on repaying its dues to Exim Bank Ltd and thus was not eligible to bid for companies under the IBC. That led to uncertainty on whether Liberty House’s bid for Amtek would go through. Liberty House later cleared all the dues.
Amtek Auto owes in excess of Rs 12,000 crore to the financial creditors who are now expected to take a haircut of 75 per cent..
According to the Insolvency and Bankruptcy Code (IBC), it is mandatory for the resolution professional to submit the resolution plan with the tribunal for its approval within 180 days of the admission of the insolvency plea. This can be extended for another 90 days. Public-sector lender Corporation Bank had filed insolvency petitions, under Section 7 of the Insolvency and Bankruptcy Code, before the tribunal which admitted the plea on July 24. The company defaulted on repaying Rs 824 crore loans granted by Corporation Bank.
The company reported a net loss of Rs 1,624 crore in 2016-17 on the back of Rs 1,950 crore in revenues. Amtek Auto is a leading tier one machining, forging, and castings suppliers to OEMs in the auto sector with a large footprint in India and also plants in Japan , Thailand and Spain.
The RBI, had on June 13, asked banks to refer 12 troubled companies — with a combined debt of close to Rs 2.4 lakh crore — to NCLT, following several failed attempts at loan recovery.
Liberty House had secured the overwhelming approval of the Committee of Creditors to acquire and revive the Adunik Metaliks, the integrated steel production operation at Chadrihariharpur near Rourkela in eastern India. The plant currently has steelmaking capacity capable of being expanded to 1m mt per annum.
GFG is currently evaluating opportunities across its value chain and Liberty is participating in the insolvency resolution process for other significant assets in India which include Bhushan Power & Steel, ABG Shipyard, Castex Technologies, Metalyst Forgings, Amtek Ring Gear, all part of its integrated Greensteel strategy. Its target is to invest $ 5 billion in India.