The Supreme Court has granted the Resolution Professional of Amtek Auto 21 days to invite fresh bids. This need to invite fresh bids has been necessitated because of backtracking of Liberty House, a London based Business House which amongst other Resolution Applicants had submitted its resolution plan where it offered Rs.4025 crore, which included an upfront payment of Rs.3225 crore and a fresh infusion of Rs.500 crore to stabilize and improve the operations of the company.
The Committee of Creditors (CoC) and the Resolution Professional (RP) of Amtek Auto moved applications for the implementation of the resolution plan. Liberty House at this stage backtracked citing “blatant discrepancies in the condition of machinery, valuation etc.”
Earlier National Company Law Appellate Tribunal (NCLAT) on 16th August, 2019 had directed Chandigarh bench of National Company Law Tribunal (NCLT) to pass an order of liquidation for Amtek Auto Limited as the then prescribed maximum period of 270 days mandated under The Insolvency and Bankruptcy Code 2016 (IBC) had lapsed.
The total time for completion of resolution process has now been increased to 330 days instead of total 270 days allowed earlier. Though in the calculation of earlier period of 270days the period of litigation was excluded which will now not be excluded while arriving at the period of 330days. Under the recent amendments to IBC the period was extended by 90 days for ongoing cases which had not been resolved within the period of 270 days.
In the case of Amtek Auto the CoC and the RP approached NCLT with a plea to extend the corporate Insolvency Process (CIRP) Period beyond 270 days and sought to restart the bidding process.
It is a welcome move that the Supreme Court has extended the CIRP period by 90 days and also allowed to call fresh bids. This move will help all the stakeholders including the financial creditors, operational creditors and the employees if the company is saved by any of the new Resolution Applicant(s).
Besides, Insolvency and Bankruptcy Board of India (IBBI) has also approached the Supreme Court to seek the permission to initiate criminal proceedings against Liberty House Group for backtracking on its resolution plan for Amtek Auto. If IBBI plea goes through and Liberty House gets any penalties due to its backtracking will set a precedence for future and all Resolution Applicants will have to be extra cautious while submitting their Resolution proposals and backtracking from the proposal will be deterred with the new rulings/judgments arising out of this case. Such judgments could become new milestones for IBC 2016 and also for the businesses in India.