Lenders to Castex Technologies, a debt-ridden subsidiary of the bankrupt Amtek Auto, have moved the National Company Law Tribunal (NCLT) to withdraw an application that had sought the tribunal’s nod to go ahead with the approved resolution plan submitted by the UK-based Liberty House Group (LHG).
“Keeping in mind with the recent conduct of the LHG, it was decided to vote on the question whether the application seeking approval of the resolution plan should be withdrawn. The CoC by a majority vote of 78.61% has decided to pray before the Chandigarh bench for withdrawal of the application,” a source said.
On behalf of the CoC for Castex technologies, State Bank of India (SBI) has filed the application with the Chandigarh bench as LHG failed to comply with even the basic requirement of furnishing the performance bank guarantee (PBG) which was required to be given upon approval of the resolution plan by the CoC.
“The inability of the resolution applicant in submitting the PBG of Rs 100 crore casts doubts on its ability to implement the resolution plan which contemplates total payment of Rs 2,505 crore,” SBI said in its petition. The matter will be heard on Friday.
LHG has also defaulted on paying the committed upfront money in time to the lenders of Amtek Auto which prompted them to move NCLT seeking directions on the way forward. The matter will be heard on December 18. On July 25, lenders had approved LHG’s resolution plan for Amtek Auto that sought to pay financial creditors `3,225 crore upfront and make fresh infusion of Rs 500 crore into the company for improving operations.
The UK-based firm has also failed to comply with the conditions of providing the performance bank guarantee for ARGL, also an Amtek Auto subsidiary, even after unconditionally accepting the LoI after its resolution plan was approved by the CoC. On December 5, lenders got NCLT’s approval to withdraw the resolution plan. LHG has also defaulted in implementing the resolution plan in the case of Adhunik Metaliks.
The resolution plan submitted by LHG for Castex Technologies was approved by the CoC on August 27 with a majority of 98.8% vote. Castex’s resolution professional Dinkar Venkatsubramanian had on September 4 filed an application before the NCLT to approve the plan and on September 10, reminded LHG to furnish the PBG as well as the process document within a week.
On September 15, LHG informed that it was working towards compliance of the obligations by converting its existing bid bond guarantee of `40 crore into a PBG and for the remaining Rs 60 crore, it would create an overseas escrow account on the terms that permits utilisation of the amount towards upfront payment, but failed to furnish the PBG ahead of the stipulated deadline.
On September 28, the CoC decided to bring the non-payment of the PBG issue before the NCLT. On November 21, keeping in view the continuing default on behalf of the LHG, decided to invoke the bid bond guarantee submitted by the UK-based firm.
Source: December 14,2018