After several aborted bids for insolvent companies, banks and resolution professionals (RPs) have reached an understanding to keep the UK-based Liberty House out of the stressed asset market in India, two people aware of the developments told sources. Liberty House had emerged as the top bidder for ABG Shipyard, Adhunik Metaliks and Amtek Auto, but it did not follow through with the process to fully pay the creditors of these companies.
Eventually, ABG Shipyard went into liquidation. The National Company Law Appellate Tribunal (NCLAT) has stayed a liquidation order for Adhunik Metaliks in response to a plea from Liberty House. Amtek Auto has gone in for a fresh bidding process.
“Given that they have been a repeat offender, they have already been blacklisted, even though this has not been done through the legal route,” one individual aware of the development told sources.
The Insolvency and Bankruptcy Board of India (IBBI) had earlier moved the Supreme Court seeking criminal proceedings against Liberty House for failing to complete the resolution of Amtek Auto. The apex court has agreed to hear the case.
The procedure for selecting a top bidder in any asset undergoing resolution under the Insolvency and Bankruptcy Code (IBC) has quantitative as well as qualitative parameters. While the value of the bids and other financial metrics are given a 70% weight in the evaluation process, qualitative factors, such as the bidder’s experience in a particular sector and their governance track record, bear a 30% weight.
“Since Liberty House has made a series of hasty bids without being able to follow up on them, their track record has been adversely affected. So they will be at a disadvantage in terms of the qualitative aspect and they will be kept out,” said another source close to the development.
In response to emailed queries from sources, a spokesperson for Liberty House said the company would continue to fight the charges against it. “We believe these charges have no merit and we will be vigorously defending our position.
“Unfortunately, issues uncovered during due diligence meant that we were unable to complete our acquisition of Amtek Auto. India’s Insolvency and Bankruptcy Code laws are new and a number of other companies are facing litigation. Our overarching goal continues to be to revive distressed companies and to safeguard jobs,” the spokesperson said.
Liberty House is an international metals and industrial group, specialising in commodities, metals recycling, manufacture of steel, aluminium and engineering products.
Headquartered in London, it also has strategic global hubs located in Paris, Dubai, Singapore, Hong Kong, Sydney and New York, and an extended network of operations covering more than 30 countries.
Source: Financial Express, October 18, 2019