The Kolkata bench of the National Company Law Tribunal (NCLT) has declined to pass an interim order, sought by the lenders to the bankrupt Adhunik Metaliks (AML), to revive the corporate insolvency resolution process (CIRP) by re-appointment of the resolution professional (RP).
The NCLT observed that as the successful resolution applicant, Liberty House, has allegedly failed in paying the upfront amount to the creditors in order to acquire debt-ridden AML, the ‘remedy’ available to the Committee of Creditors (CoC) is to seek an order of liquidation of the company upon establishing “willful default” on the side of the UK-based group.
“…I am not inclined to pass interim order as required,” justice Jinan KR said. Earlier on Thursday, lenders to AML filed appeals before the NCLT for reinitiating the CIRP process as they have received application from Maharashtra Seamless stating that it is ‘ready’ to acquire the debt-ridden company. Following that the tribunal reserved its order on the CoC’s application.
While UK-based Liberty House failed to make the upfront cash payment within the stipulated time, Maharashtra Seamless, the second highest bidder (H2), has submitted an application to the Committee of Creditors (CoC) informing that it has the fund ready to take over the debt-ridden steel manufacturer, CoC’s counsel Joy Saha said in his submission before the bench of justice Jinan KR.
“As the value of the assets of AML is going down, at least the CoC should be allowed to talk to the other bidders while the litigation is pending. And for that the committee needs the RP (Resolution Professional). The RP is also required for taking care of assets of the company,” Saha said while praying for granting an extension of time in the CIRP and also reappointment of the RP.
“Maharashtra Seamless has told us that Rs 500 crore is ready with it for the acquisition,” Saha added. In its application, the CoC has sought additional time of 12 weeks from Thursday for completing the insolvency resolution process. Notably, there were only two resolution applicants for AML— Liberty House 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 then rejected as it had been offering less value than the liquidation value of the company.
On Thursday, appearing on behalf of Liberty House, advocate Gopal Mukherjee, contested Saha’s arguments. “Now neither can the insolvent firm go for liquidation, nor can the extension of CIRP process be granted,” he argued before the bench.
Last month the lenders, led by the State Bank of India, had rejected an offer of Liberty House, a part of Sanjeev Gupta-led GFG Alliance, to pay an outstanding of around `410 crore in two installments by January 15. They had also turned down Liberty House’s condition that out of the total amount, it be allowed to deposit Rs 100 crore — claimed by operational creditor MSTC — in an escrow account. The issue of state-run MSTC claiming around Rs 100 crore is now pending for consideration before the National Company Law Appellate Tribunal (NCLAT).
In a statement issued on January 15, Liberty House Group (LHG) said the NCLAT had made MSTC a party to the case and listed the case for hearing on January 30. “LHG is confident of legal resolution and committed to implementing its resolution plan to ensure revival of the Adhunik Metaliks and Zion Steel business,” the statement added. The NCLT listed the matter for further hearing on February 12.
Earlier, aggrieved lenders had moved the Kolkata bench of NCLT after Liberty House had failed to make the upfront cash payment within the stipulated time for acquiring the steel company under the IBC. Following this, the international metals and industrial group had offered to pay Rs 100 crore within 14 days and the balance Rs 310 crore by January 15. Lenders to AML are SBI, Punjab National Bank, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, Bank of Baroda, Corporation Bank and SREI Infrastructure Finance, among others.
Source: Financial Express, January 26,2019