Amtek Auto Ltd’s debt resolution process has hit another hurdle as US hedge fund Deccan Value Investors, which received court approval to take over the company two months ago, is looking to either tweak or even scrap the deal.
The National Company Law Tribunal (NCLT) had approved DVI’s offer of Rs 2,700 crore ($359 million then) for Amtek Auto in July. The NCLT had then asked DVI to pay a bank guarantee and seek antitrust approval within a fortnight.
DVI subsequently moved the National Company Law Appellate Tribunal and the Supreme Court to seek certain clarifications on the NCLT order. Now, it has invoked the “force majeure” clause citing the ongoing coronavirus pandemic-led that damped industrial activity and worsened Amtek Auto’s performance, Business Standard reported.
The report said DVI confirmed that it had invoked force majeure on the grounds that the pandemic had severely impacted the auto sector and Amtek Auto, “rendering DVI’s commercial assumptions for the company redundant”.
According to the report, a force majeure clause is generally not agreed upon under bankruptcy cases. But it was signed by Amtek’s committee of creditors, led by IDBI Bank, in January as the pandemic had hit China by then.
Last month, citing people it didn’t identify, The Economic Times had reported that DVI didn’t meet the NCLT’s payment deadline and that it was looking to “wriggle out” of the deal.
DVI couldn’t be reached for comment for this article. Amtek’s resolution professional, Dinkar T Venkatsubramanian, declined to comment, saying only that the matter was pending before the Supreme Court and the NCLAT.
Amtek Auto is one of the longest-running cases under the Insolvency and Bankruptcy Code (IBC). The company was dragged to the NCLT by Corporation Bank and its insolvency resolution process started on July 24, 2017.
The auto-parts maker was one of the 12 large corporate defaulters that the Reserve Bank of India had identified in June 2017 for insolvency proceedings. It owed its financial and operational creditors about Rs 12,800 crore.
In March 2018, the UK-based metals group Liberty House emerged as the highest bidder for Amtek. Besides Liberty, Amtek also attracted a bid from DVI. Liberty House later failed to meet its payment obligations. This prompted the company’s lenders to start a fresh bidding process. DVI emerged as the winning bidder in February this year.
DVI offered to pay Amtek’s creditors around Rs 450 crore in cash upfront. It would pay the balance amount through future receivables that assumed recovery from tax refunds, sale of non-core real estate and other assets of the company. It had also offered Rs 300 crore from optionally convertible debentures payable over seven years.