19 March 2019: After Amtek Auto, the Chandigarh bench of the bankruptcy court has allowed fresh bids for its distressed unit Castex Technologies, with the winning bidder Liberty House failing to pay Rs 100 crore as performance bank guarantee for its resolution plan.
However, the National Company Law Tribunal (NCLT) bench has said that while seeking fresh bids, the resolution professional must also “consider” the second highest bidder, Deccan Value Investors (DVI).
“…there is a clear default in not complying with the essential terms and conditions of the… process memorandum,” the court said in its written order published on Friday. Liberty House had offered to pay Rs 2,505 crore for Castex, which owes Rs 7,313 crore to lenders. Liberty House declined to comment.
For effective conclusion of the resolution process, a period of 118 days has been deducted from the total period of 270 days to account for the time spent on litigation after Liberty House was adjudged the preferred bidder. The 270-day period had expired in September last year.
According to the process memorandum, Liberty House was required to pay Rs 100 crore as performance bank guarantee within 10 days of receiving the letter of intent (LoI), something it failed to do. Later, it came up with an offer to convert the bid bond guarantee of Rs 40 crore into performance bank guarantee and to create an escrow account for the remaining Rs 60 crore.
However, the tribunal refused to accept the payment in the offered form.
For Amtek Auto, the parent company of Castex, Liberty House had emerged the highest bidder but failed to pay the required Rs 4,400 crore. For both bids, the UK-based steel company claimed there were differences between sales and profit projections shared with it and what existed in reality.
The court has imposed a fine of Rs 10 lakh on Liberty House as “exemplary costs” for making a “mockery of the system of the CIRP process for which strict timelines are provided”.