Adhunik hopes dim for Liberty
Liberty House Group, the UK-based conglomerate led by Sanjeev Gupta, has failed to buy another stressed asset from India’s bankruptcy court within the stipulated time.
The National Company Law Appellate Tribunal had set a 30-day deadline for Liberty to make an upfront cash payment (Rs 410 crore) for insolvent Adhunik Metaliks Ltd. The period ended on Sunday with lenders and Liberty confirming they are yet to close the deal.
Sources said Liberty had sought more time when its representatives met the lenders last week to bring in the money, citing pending compliances. However, the lenders are unwilling to offer the long rope to Liberty, anymore, primarily because it had already missed several deadlines.
“Adhunik Metaliks is a good asset and there may be other takers. We do not want it to be liquidated. We want a fresh round of bidding,” a member from the committee of creditors of Adhunik said over the weekend.
The CoC is likely to buttress its argument, citing a recent order of the Chandigarh bench of the NCLT on Amtek Auto. Liberty was the successful resolution applicant there, too, but failed to bring in the money within the stipulated time. The bench allowed the CoC to go for a fresh round of bidding, asking it to wrap up the resolution process within 150 days.
Incidentally, the CoC of Adhunik Metaliks, too, had filed a similar application before the NCLT when the matter was being heard at the Calcutta bench. However, it did not press the matter then. The counsel for the CoC also showed a letter from Maharashtra Seamless, which was a bidder for Adhunik but lost out to Liberty eventually, seeking to buy the insolvent company should the lenders agree.
Gupta, the Indian-born British businessman, had made audacious bids for several bankruptcy facing companies, such as Amtek Auto and ABG Shipyard. Even though it was selected a successful resolution applicant in several of them, Liberty has not been able cross the rope in any of them.
Even as lenders, led by the State Bank of India, play hardball, Gupta’s Liberty is not out yet. The company is likely to move court on Monday seeking more time to conclude the deal, ahead of the scheduled hearing at NCLT Cuttack on April 23.
Sources in Liberty said they were unaware that clearance from the stock exchanges were required as part of the transaction which involves the issue of shares and debentures by Adhunik Metaliks.
“We are working on procuring the statutory and regulatory approvals, which are a vital part of the implementation plan,” a Liberty spokesperson said.
On April 2, the board of Adhunik Metaliks met to approve the issue of 2 crore equity shares of Rs 10 each on a preferential basis, amounting to Rs 20 crore to Gupta’s LHG Metal Two Private Limited in terms of the resolution plan approved by NCLT, Calcutta Bench, on July 17, 2018.
Sources close to Liberty said Adhunik would need to take the approval from the bourses, indicating that the responsibility of failing deadline did not lay with them.
However, an official from the CoC put the onus back on Liberty. “These shares and debentures will be issued when the monitoring committee approves. The approval will come only after Liberty brings in Rs 410-crore upfront cash,” the official added.
Previously, Liberty was dithering on payment, citing a case by public sector MSTC Ltd who had a claim on Adhunik. NCLAT, in its judgment of March 15, 2019, dismissed the claim and allowed “one opportunity” to close the transaction by April 14, failing which the lower tribunal may pass “appropriate order in accordance with law”.
According to a previous order of NCLT Calcutta, Liberty House had to make an upfront cash payment of Rs 410 crore to the secured financial creditors, who collectively had a Rs 5,371.23-crore claim on Adhunik, by September 12.
However, the company deferred the payment and sought time from the Calcutta bench, as it wanted a “clean asset”, referring to the legal challenge mounted by MSTC.
MSTC was listed as an operational creditor having a claim of Rs 108.36 crore to Adhunik. It had supplied iron ore, coal and other raw materials to the debt-laden company. MSTC had objected to Liberty’s resolution plan approved by the CoC.
The UK company is paying Rs 30 crore as against combined claim of Rs 273.27 crore by the operational creditors.