Debt-laden Amtek Auto received a shot in the arm with the Supreme Court on Tuesday allowing resolution professional and lenders to invite fresh bids for the insolvent company within 21 days. It also asked the Committee of Creditors (CoC) of Amtek Auto to decide on final resolution plan within two weeks thereafter. The Tuesday’s order saved the auto components manufacturer from liquidation after no resolution was found within the 270-day deadline as UK-based Liberty House, the successful bidder, backed out citing technical reasons.
A three-judge bench led by justice Arun Mishra asked the RP to publish advertisements for fresh bids on Wednesday. The CoC has 21 days to seek bids and will have to take a call on final bid in two weeks thereafter. The final decision on the resolution plan has to be placed before the apex court on November 5 as the deadline for resolution expires on November 15.
The apex court had earlier on September 6 stayed the NCLAT decision that ordered liquidation of debt-ridden Amtek Auto, which was among the first list of the 12 companies that were referred by RBI for initiation of insolvency process in 2017.
Solicitor general Tushar Mehta, appearing for the bank, requested the bench to extend the time for resolution and allow the CoC to invite fresh bids. He submitted that this is the time when automobile sector is going through a recession, sending Amtek Auto to liquidation will not serve anyone’s purpose. Amtek Auto has a liability of around `11,500 crore.
Besides, IBC does not stipulate that a insolvent company has to compulsorily go into liquidation if the 330 day timeframe for insolvency process is over, the SG said.
The lenders led by Corporation Bank had told the SC that Amtek Auto being a financially viable entity was being pushed into liquidation merely on account of the fact that Liberty House had defaulted in implementing the resolution plan.
Supporting Mehta, senior counsel Anupam Lal Das, on behalf of RP, argued that the entire period of 270 days can be resiled as was done in the case of ArcelorMittal.
However, the judges said that it is not going to violate the law.
Senior lawyer Mukul Rohatgi, appearing for Liberty House, said that he was supporting the lenders. Giving reasons for backing out, he said that Liberty House had bid for Amtek Auto as the lenders had claimed its assets were worth around `9,500 crore. Later, the balance sheet of the company showed its assets were worth only `2,700 crore, he added.
The Supreme Court also issued notice to Liberty House on an appeal filed by the Insolvency and Bankruptcy Board of India (IBBI) seeking to initiate criminal proceedings against it for backing out of the deal to take over debt-laden Amtek Auto. IBBI stated that the National Company Law Appellate Tribunal (NCLAT) had rendered them powerless and taken away its and the central government’s powers to grant sanction before initiating trial under Section 236 of the IBC before a special court.
“The finding rendered will have a direct bearing on the implementation of the CIRPs and in turn will affect all resolutions,” the Board said, adding that the ruling will have huge ramifications on criminal trials initiated by the Board and the central government before the special courts all over the country.
The NCLAT had ruled that the NCLT has to satisfy itself first after giving an opportunity of being heard to the accused, request the central government to investigate and then decide on such opinion whether or not to refer the matter for trial.
The Corporate Insolvency Resolution Process of Amtek Auto was initiated on July 24, 2017 by the NCLT and lenders of the company had selected the resolution plans by two firms — Liberty House and Deccan Value which later withdrew from the race. A revised plan of Liberty House was selected by the CoC on April 2, 2018 with 94.20% votes and the same was upheld by NCLT on July 25,2018.
However, Liberty House backed out from the race and even refused to furnish the performance guarantee and other terms and conditions which were approved, following which lenders requested NCLAT to give 90 days more time to find a new buyer.
However, the appellate tribunal on August 16 had directed the Chandigarh bench of the National Company Law Tribunal to pass an order of liquidation as 270 days mandated under the IBC for finalising a resolution plan had already lapsed.