The National Company Law Tribunal (NCLT) has ordered the liquidation of Adhunik Metaliks Ltd and unit Zion Steel after the UK-based Liberty House Group failed to implement its resolution plan for the debt-laden companies.
The Cuttack bench of the NCLT said in an order issued on July 7 that Liberty House couldn’t implement its resolution plan and that the 270-day period to complete the insolvency resolution process was over long ago.
This is the second company that steel tycoon Sanjeev Gupta’s Liberty House was keen to acquire but is now headed for liquidation. In April, ABG Shipyard was ordered into liquidation after lenders rejected Liberty House’s sole bid.
The tribunal also rejected a plea by Adhunik’s lenders to allow them to consider an offer by Maharashtra Seamless Ltd involving capital infusion into the stressed companies as it was below the liquidation value.
“In such a situation, the authority [NCLT] cannot reset the clock back to day one. I cannot allow the committee of creditors to restart the corporate insolvency resolution process afresh over and again,” the order said.
Adhunik’s committee of creditors had sought permission to consider the offer by Maharashtra Seamless, which was the second-highest bidder for the assets of Adhunik Group of Industries.
Adhunik Group, which employs over 1,500 workers, has a debt of more than Rs 5,000 crore.
Maharashtra Seamless can still apply to acquire the companies under Sections 230-232 of the Companies Act that deal with mergers and acquisitions. The CoC may then be permitted to consider its resolution plan, the order said.
Adhunik’s lenders, led by State Bank of India, had approved Liberty House’s resolution plan in July 2018. However, the plan got delayed due to certain claims by state-run MSTC Ltd. The claims were later rejected by both National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.
Although the claims were rejected, Liberty House failed to pay Rs 410 crore and said it did not receive the offer letter from lenders for equity shares, which made it difficult for the UK-based company to invest funds.