- Posted by Arpit Marwah
- On September 30, 2019
- 0 Comments
- SUPREME COURT ALLOWS FRESH RESOLUTION FOR AMTEK;
Amtek Auto gets a ray of hope by the recent order of issuance of fresh bids
Amtek Auto, an integrated component manufacturing company, established in 1985 is on the verge of revival instead of going into liquidation, considering the Supreme Court’s latest decision of putting a stay on National Company Law Tribunal’s (NCLT) decision.
The case arose from a Rupees 12,000 crore debt that this company had come under, and from which escapade seemed none.
The Resolution Process that was assigned in Amtek was able to successfully rope in a bidder to save the company. It was the UK-based, Liberty House, who took up the responsibility of Amtek Auto and offered to pay an amount of Rs. 3,225 Crores to the financial creditors and vowed to put in an extra 500 crores for improving operations in the company. However, a major jolt came when the bidder failed to pay and the Chandigarh Bench of the NCLT whilst imposing a cost on the bidder, allowed them to withdraw their bid.
The NCLT then initiated liquidation proceedings against Amtek, based on no bidders to save the company’s fate. It was this decision that was appealed in the Supreme Court, by the Company of Creditors (CoC) who pleaded that the liquidation of Amtek would yield no benefit to anyone but would only hamper the lives of around 2800 employees working for Amtek. It was also pleaded that there were about eight bids that couldn’t formally be catered to, due to this appeal’s pendency in the Supreme Court. Solicitor General (SG), Tushar Mehta, Counsel for CoC also contended that extension is allowed since the withdrawal of Liberty House disintegrated the whole timeline for a successful closing of bids.
The Supreme Court heard both Amtek and Liberty House’s contentions before making a decision favoring Amtek. While on one hand, Amtek was of the opinion to restart the bidding process; on the other hand, Liberty House defended their act of backing down from further honoring the bid because Amtek had misrepresented their accounts.
It was contended initially by SG that the time provided in Insolvency and Bankruptcy Code, 2016 (IBC) u/s 12 of the Act was consumed by Liberty House’s resolution process that wasn’t even implemented successfully considering the commission of breach. Soon after this was shunned down and liquidation proceedings were ordered by the NLCT, the SG then contended the same in the Supreme Court of India.
The IBC stays silent on whether the most viable option is to initiate liquidation proceedings directly or not after the resolution plan failed to work out. However, the Bench in the Supreme Court was brought into notice that as per the amendment of section 12 of the code, the third proviso provided 90 days since the commencement of the Amendment Act, to close the resolution process. In Amtek’s case, there was time till the 15th of November 2019 to complete the resolution.
It has been observed by the Bench that the Resolution Professional shall publish invites for bids by 25th September 2019 and within two weeks after the passage of this date, the CoC shall present all the records of bids received and finalized, in front of the Bench.
Although the Supreme Court refrained from getting into the dynamics of the silent provision of the code, the Supreme Court allowed CoC to invite fresh bids, considering the timeline that the amendment created for Amtek. It is now ordered that the CoC issues these bids within 21 days frame instead of the usual 30 days, owing to the dearth of time for submission of the offer.
The matter is set to be heard on the 5th of November 2019.
The Supreme Court’s order of not putting Amtek through liquidation for time being is surely a tad moving. Although clarity is opaque about what would be the fate of Amtek in the next hearing, chances of it passing through the rigorous liquidation seem minute