A bankruptcy court has ordered liquidation of debt-laden ABG Shipyard Ltd after lenders rejected an offer by the sole bidder Liberty House.
The development comes almost two years after the Reserve Bank of India asked lenders to initiate bankruptcy resolution proceedings against ABG Shipyard and 11 other companies under the Insolvency and Bankruptcy Code (IBC).
The National Company Law Tribunal (NCLT) sent the company into liquidation on April 25, ABG Shipyard said in a stock-exchange filing on Wednesday.
ABG Shipyard is the second shipbuilder to be sent to liquidation after Bharati Defence and Infrastructure Ltd in January this year.
The Mumbai-based company said that its Committee of Creditors (CoC) had previously noted that the offer by Liberty House in two rounds did not fulfil all the repayment requirements of the creditors and was much below the liquidation value.
A person familiar with the matter told VCCircle that the UK-based Liberty House failed to prove its ability to fund several transaction payments.
"There were two sets of plans but both did not fetch anything to lenders," the person said, asking not to be named.
ABG Shipyard’s liquidation value was pegged around Rs 2,200 crore. Liberty House had claimed that it offered a sum higher than the liquidation value of the company and urged the tribunal to entertain its bid.
The UK-based group, which has business interests in steel, financial services and auto parts sectors, had offered Rs 5,200 crore on a deferred basis stretching over five to 10 years. The bid also included an upfront amount of Rs 400 crore and issue of debentures.
Apart from Liberty House, Shapoorji Pallonji Group and Mahindra Group had evinced interest in ABG Shipyard but did not make any firm offer.
The shipbuilder owes total debt of more than Rs 16,000 crore to 22 banks led by ICICI Bank.
After failing to restructure the debt, the company was taken to the insolvency court on the RBI's directions in 2017.
On 20 February 2019, the CoC decided to liquidate the company and authorised the resolution professional Sundaresh Bhat to file an application before the Ahmedabad bench of the NCLT, ABG Shipyard informed the stock exchanges.