This comes after the bankers led by State Bank of India refused the offer of Liberty House to pay up in installments: Rs 100 crore now and Rs 310 crore later
Liberty House of UK may fail to finally acquire Adhunik Metaliks despite emerging as the preferred suitor.
The Committee of Creditors has threatened to invoke the liquidation provision of the Insolvency and Bankruptcy Code (IBC) if Liberty owner Sanjeev Gupta fails to pay up within the next week Rs 410 crore, the money offered and approved in its resolution plan.
This comes after the bankers led by State Bank of India refused the offer of Liberty House to pay up in installments: Rs 100 crore now and Rs 310 crore later.
Gupta’s Liberty House, which has bid for several domestic steel and allied assets like Amtek Auto group put up for sale through the insolvency resolution process, was selected in July as the successful resolution application for Kolkata-headquartered Adhunik Metaliks, a maker of auto grade steel.
It promised to pay Rs 410 crore and as per IBC, a successful applicant has to pay up the upfront amount within 57 days from the day of approval of the resolution plan.
With Liberty failing to pay up, the Committee of Creditors has moved the National Company Law Tribunal (NCLT) requesting to pass order under Section 33, Subsection 3 of IBC in case Liberty fails to pay up by Wednesday.
The relevant portion of the IBC states: “Where the resolution plan approved by the Adjudicating Authority is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order”.
Liberty had even put a condition for the balance payment of Rs 310 crore by January, saying that Rs 100 crore out of that should be put in an escrow account earmarked for one of the operational creditors, state-owned MSTC Ltd, which has claimed a similar amount and has moved the National Company Law Appellate Tribunal.
“The above submission can’t be entertained by me at this juncture as because as per approved resolution plan, the liquidation value payable to MSTC is nil,” Judge Jinan RK has said.
With this observation, NCLT has refused to pass an order on the plea which is against the approved resolution plan and is dependent on the future outcome of the NCLAT order on MSTC’s request for relief.
Not just Adhunik, Liberty House, which came to focus buying up assets like Tata Steel UK’s speciality steel division, is now dragging its feet in paying up for some of the other assets including Castex Technologies and ARGL, both subsidiaries of Amtek Auto.
In both these cases, Liberty has refused to provide performance bank guarantees to the bankers.
SHOW ME THE MONEY
Rs 410 crore – Liberty House has to pay up for buying Adhunik Metaliks
Rs 100 crore – Liberty House has offered to pay now and rest Rs 310 crore later
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