In a recent update on the bankruptcy case of Kolkata based steel maker, Adhunik Metaliks, its CoC (Committee of Creditors) approved bidder, Liberty House failed to make upfront payments of INR 410 crore to its operational creditors within the stipulated time of October 2018. Subsequently, the NCLT (National Company Law Tribunal) has suggested the CoC to seek liquidation of Adhunik Metaliks.
Sanjeev Gupta led Liberty House had to make upfront payment of INR 410 crore to the secured financial creditors, who collectively have a INR 5,371.23-crore claim on Adhunik, by September 12. However, the UK-based company had filed an application on October 10 seeking an extension of the deadline to make the payment. Nonetheless, the Kolkata bench of NCLT said on Monday that it had no power to issue any such notice.
As per market sources, CoC might however weigh options other than liquidation and move an application before NCLT Kolkata soon. The next hearing has been listed for January 3, 2019.
Why Liberty House didn’t make payments to the creditors?
In July 2018, Liberty House’s bid for acquisition of Adhunik Metaliks got approval from CoC and the former was all set to enter the Indian market after the payment to the operational creditors. However, it is being learned that Liberty House has purposefully not made payment to the creditors as it wants a clean asset referring to the case pending at NCLAT (National Company Law Appellate Tribunal) between one of the creditors MSTC and Adhunik Metaliks.
MSTC was listed as an operational creditor having a claim of Rs 108.36 crore to Adhunik. The PSU supplying iron ore, coal and other raw materials to Adhunik objected to Liberty’s resolution plan approved by the CoC. Liberty was paying INR 30 crore against a combined claim of INR 273.27 crore by the operational creditors. While clearing the plan, NCLT Kolkata rejected MSTC’s application which then moved the appellate tribunal challenging the plan. Liberty has also not made any upfront payment for one more company Amtek Auto, which was on the RBI’s first list of defaulters sent to the NCLT.
The industry experts are of the opinion that Liberty House has engaged itself in too many assets across the globe and will go for the most profitable one as there is no case of cash crunch with group given the fact that it is on a spree to buy assets in Europe and is also a bidder for another insolvent Indian company, Bhushan Power and Steel.
Adhunik Metalaliks is an integrated steel maker that has a production unit in Chadrihariharpur, near Rourkela, in Odisha. The plant’s capacity can be expanded to one million tonne per annum and company’s integrated operations include sponge iron, blast furnace, electric furnaces and downstream rolling of finished steel products. The company is on the second list of 28 loan defaulters that the RBI had asked banks to be taken to the NCLT for the resolution last year.
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