Mumbai: The Chandigarh bench of the National Company Law Tribunal (NCLT) on Wednesday allowed the committee of creditors of Amtek Auto to start the resolution process from scratch, 18 months after the process was first initiated, according to two people aware of the matter.
The NCLT said that the process should be completed within 150 days. It decided to give additional time on account of the period between the date of submission of the first set of resolution plans in March 2018 and the date on which the bench approved UK-based Liberty House as the winning bidder for Amtek Auto.
“The CoC can now either call for fresh bids or look at other applicants who had bid in the first round of resolution process. However, that will be decided after the order comes out," said one of the people cited above.
The committee of creditors had approached NCLT after Liberty House failed to honour its payment commitments despite receiving the tribunal’s approval. The lenders also filed an application with NCLT to cancel the approval as Liberty House had not submitted a bank guarantee of ₹100 crore to them.
Liberty House had, on its part, alleged “misrepresentation of facts" and discrepancies in valuation of the stressed asset.
Amtek Auto was referred to NCLT in July 2017, after it defaulted on repayment of loans worth ₹12,300 crore. Liberty House was declared the resolution applicant for the company in July last year, with a winning bid of ₹4,100 crore.
The bench allowed creditors and the resolution professional to move against Liberty House, under section 74(3) of the Insolvency and Bankruptcy Code, for defaulting on repayments.
Under this section, a person who defaults on a court-approved resolution plan can be subject to a fine of up to ₹1 crore and imprisonment between one to five years, or both.
Amtek Auto was one of the 12 large corporate accounts identified by the Reserve Bank of India in June 2017 for immediate insolvency proceedings. However, the resolution process got delayed after Liberty House ran into trouble with section 29 (A) of the Insolvency and Bankruptcy Code when banks found that it owed $2.8 million to Exim Bank.
Section 29(a) bars entities linked to insolvent companies, wilful defaulters and anyone with a non-performing loan from bidding for stressed assets.
This clause resulted in Liberty House being declared ineligible to bid for ABG Shipyard and Amtek Auto until it settled the dues. Subsequently, Liberty House settled the Exim Bank dues.