23 July 2019: The National Company Law Appellate Tribunal (NCLAT) has stayed the order of the Cuttack Bench of the National Company Law Tribunal (NCLT) to liquidate Adhunik Metaliks (AML) after Liberty House Group moved the appellate tribunal against the liquidation order.
Earlier this month, the Cuttack Bench of the NCLT had ordered liquidation of the bankrupt steel maker after cancelling the resolution plan of Sanjeev Gupta-led Liberty House Group, with the UK-based group failing to implement the resolution plan submitted by it for bankrupt AML under the corporate insolvency resolution process (CIRP).
In a stock exchange filing on Monday, AML said, “Liberty House Group preferred appeals before the NCLAT against the liquidation order dated July 9, passed by the adjudicating authority, NCLT Cuttack Bench, in the matter of Adhunik Metaliks.”
In its order dated July 17, the NCLAT said, “Until further orders, operation of the impugned order of liquidation shall remain stayed.”
According to the order, the advocate appearing for State Bank of India (SBI), the lead lender, may file reply affidavit within two weeks. Rejoinder, if any, can be filed within two weeks thereafter. The appellate tribunal has directed to list the matter on August 28. Lenders to Adhunik Metaliks are SBI, PNB, ICICI Bank, IFCI, Punjab & Sind Bank, UCO Bank, Allahabad Bank, BoB, Corporation Bank and Srei Infrastructure Finance, among others.
Earlier, after Liberty House had failed to make the upfront cash payment of Rs 410 crore within the extended timeline to acquire AML, the Committee of Creditors (CoC), led by SBI, had filed an application before the Cuttack Bench of the NCLT to cancel the resolution plan of the LHG stating that it had “committed breach” in implementation of the plan.
In his submission before Justice Madan B Gosavi of the NCLT Cuttack Bench, the counsel for CoC had appealed to revive the CIRP by excluding period vested by LHG by not implementing the resolution plan as the group had not paid the required upfront cash payment to lenders within the stipulated deadline set by the NCLAT. The CoC’s counsel had also requested the Bench to allow them to consider the resolution plan submitted earlier by the H2 bidder, Maharashtra Seamless.
Notably, there had been only two resolution applicants for the debt-ridden steel manufacturing company — Liberty House and Maharashtra Seamless of the DP Jindal Group. LHG had been identified as the highest bidder (H1) by the creditors, while the plan of Maharashtra Seamless had been rejected as it had been offering less value than the liquidation value of the company.
During the hearing by the Cuttack Bench, Liberty House counsel Arvind Kumar Gupta had requested it to give directions to the CoC, the monitoring committee and the managing committee for the corporate debtor to cooperate with them in implementing the resolution plan in proper prospective as per the terms laid down in the plan. The Kolkata Bench of the NCLT had in July last year approved the resolution plan submitted by Liberty House, with lenders agreeing to take a haircut of around 92% and settling for Rs 410 crore against their outstanding dues of Rs 5,370 crore.