9 July 2019: Close to two years after getting admitted for insolvency, Kolkata-based Adhunik Metaliks and Zion Steel were ordered to be liquidated by the Cuttack bench of the National Company Law Tribunal (NCLT) on Monday after Liberty House failed to implement its resolution plan.
However, Maharashtra Seamless — which had submitted a revised offer — can still apply to acquire the companies under Sections 230-232 of the Companies Act that deals with mergers and amalgamations, the bench ruled.
The NCLT though rejected a plea by the committee of creditors to be allowed to consider the offer. Maharashtra Seamless was the second-highest bidder for the assets of Adhunik Group of Industries, which has collective debt of more than Rs 5,000 crore and employs over 1,500 workers. Liberty House’s plan was approved in July 2018 but its implementation got delayed.
The delay occurred due to MSTC’s claims which were later rejected by both the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.
However, even after the claims were dismissed, the Liberty House failed to pay the upfront amount of Rs 410 crore, saying the lenders did not issue it an offer letter for equity shares, which made it difficult for the UK-based company to invest funds as per plan.
The NCLT bench said this concern was deliberately raised at a belated stage by Liberty House. “In this case, the situation that has arisen is that successful resolution applicant Liberty House Group is not in (a) position to implement the resolution plan,” said the order. EThas seen the order. “Corporate Insolvency Resolution Process period of 270 days has already been over along back. In such a situation, this authority has no option but to pass order of liquidation of the Corporate Debtor as per Section 33 of Insolvency and Bankruptcy Code, 2016,” the NCLT bench said.
Rejecting the lenders’ appeal to be allowed to consider the Maharashtra Seamless offer, the bench said that in its earlier form the offer was rejected because the capital being infused into the stressed companies was below the liquidation value. “In such a situation, the authority cannot reset the clock back to Day One. I cannot allow the Committee of Creditors to restart the Corporate Insolvency Resolution Period afresh over and again.” Liberty House did not offer any comment.
A source aware of the developments said the banks are reviewing the matter and may contest the NCLT order.
Sumit Binani of Grant Thornton, who was the resolution professional, has been asked to liquidate the company as a going concern. However, the source mentioned above said the company is not a going concern as it has not been operational for the past 14 months. The integrated steel plant has a capacity of 0.45 million tonnes in Odisha which can be increased to 1million tonnes. Zion Steel, which is also located in the premises of Adhunik, has a rolling mill of 0.12 million tonnes.
This is the second company that Liberty House was keen to acquire that has receive a liquidation order. In April, ABG Shipyard was ordered for liquidation after the Sanjeev Gupta-led company — the sole bidder — failed to get its bid approved by the lenders.