Despite reports that Adhunik Metaliks and Amtek Auto will head into liquidation after Liberty House missed deadlines to make payments to the Committee of Creditors, the global commodities company led by London-based Sanjeev Gupta said it is fully committed to resolving all pending issues of the two companies to complete the acquisition process. To reassure the CoC for Adhunik Metaliks, Liberty House has offered to increase its earnest money deposit from the ₹55 crore paid already to ₹100 crore, it said in an emailed response to queries from Mint.
“We are extremely concerned about the workers of Adhunik Metaliks and Zion (Steel Ltd, a sister concern),” said Liberty House. “Until we take control of these companies, we are constrained from taking care of salaries and wages of employees of Adhunik and Zion. Given this situation and to show his personal commitment, our executive chairman Sanjeev Gupta has proposed that he would like to extend from his personal account, a loan equivalent to 50% of the salary of the workers, till we take charge of the company.”
Earlier this month, Liberty House, which won bids to buy out stressed assets of specialised steel maker Adhunik Metaliks and auto component maker Amtek Auto under the Insolvency and Bankruptcy Code (IBC), missed the deadline to make creditor payments. Liberty House’s resolution plan involved a payment of ₹410 crore to the lenders of Adhunik Metaliks and ₹3,225 crore to those of Amtek Auto. This is the first instance under the IBC where a buyer has failed to make the payment and complete the acquisition in time.
“We are ready to complete the implementation of our resolution plan, but we are constrained, as a material litigation (MSTC vs Adhunik) has been filed by MSTC in NCLAT wherein MSTC has claimed that a significant amount of over ₹100 crore is owed to them,” said Liberty House.
MSTC is a government-owned metals trading company.
“As MSTC has filed this against the resolution professional and the company Adhunik for goods supplied and unpaid during the resolution process…this will directly and materially impact our Adhunik resolution. We understand that MSTC has in fact been paid the full amount due to them for dues incurred during corporate insolvency resolution process. Once this is established in the Court or alternatively Court directs to remove Adhunik as a party to the Application, we are willing to proceed immediate and close the transaction,” the company said.
The NCLAT heard the matter of MSTC vs Adhunik on 31 October. The case has been adjourned to 11 December, the company said.
“We are absolutely committed to completing Adhunik and are even paying salaries and taking other steps to manage the situation from outside until we can get possession of the company,” said Liberty House.
With regard to Amtek Auto, Liberty House said “some very serious issues have been raised with the CoC; they need to be resolved prior to the 22 November deadline. If not, we will ask the court to resolve them.” No serious investor or financier will invest money in a company with serious pending issues, it added.
Business Standard reported last week that lenders to Amtek Auto were seeking to invoke Section 74 of the IBC to prosecute Liberty House if it defaults on the final payment on 22 November. Section 74 provides for a term of imprisonment of 3-5 years, a fine of ₹3-5 lakh, or both, for anybody who contravenes with the resolution plan.
To the possibility of a court-imposed resolution hereon, Liberty House said: “These are court processes and we will follow what the court decides.”
Source: Mint