Liberty House moves NCLT over 'incorrectness' of Amtek Auto valuation

The Group has alleged that misrepresentations of facts and other mistakes have affected the valuation of insolvent Amtek Auto, for which it had successfully bid

Sanjeev Gupta-led Liberty House Group, the London-based industrial and metals company, has in an application to the National Company Law Tribunal (NCLT) alleged misrepresentations of facts and other mistakes that have affected the valuation of insolvent Amtek Auto, for which it had successfully bid.

Earlier, the tribunal had ordered Liberty House to withdraw its proposed resolution plan for Amtek, saying the company was “non-serious and casual”, as it refused to give a bank guarantee. The next hearing at NCLT is on December 18. “The company (Liberty House) is still willing to buy and revive these businesses, based on corrected facts, and has applied to NCLT for directions. However, if the RP (Resolution Professional) and CoC (Committee of Creditors) decide not to sell Amtek and the two affiliated companies to Liberty, the company might accept this outcome but, under those circumstances, will claim compensation for expense and damages from the RP,” said a Liberty House source. “Misrepresentations vitiate the whole process,” he added.

Liberty had approached the RP and CoC to address issues connected to Amtek’s valuations, via letters dated on November 6, November 14 and November 21. These, it says, were not answered; hence the approach to NCLT.

“Part of the application to NCLT states that there was incorrectness in the valuation shared with us (Liberty House) as part of the information memorandum. Also, there are significant adjustments in the audited financial statements. (And),  there are significant differences between data/information shared with us as part of the virtual data room and the reality,” said Liberty sources.

Amtek Auto was referred to the NCLT under the Insolvency and Bankruptcy Code in July last year, after the company defaulted on loans worth Rs 123 billion. Liberty House had won the bid in July this year, with a bid of Rs 42 billion, with the banks agreeing to take a 67 per cent haircut (dues writeoff).

Liberty House failed to make the payment for Amtek Auto last month, the deadline set by the lenders. 

Meanwhile, at Adhunik Metaliks, another insolvent entity which Liberty House has formally won and is still in the process of taking over, the latter has sent financial assistance to employees of the unit.

"Liberty House early this month has disbursed funds for Adhunik employees even when it is still to take charge of the plant," Kishore Kumar Sahoo, president of Adhunik's staff and officers association, told Business Standard. He did not reveal the amount disbursed. About 1,200 employees of Adhunik have had no salary for nearly six months.  

"Liberty has communicated to us that if the acquisition gets a bit delayed further, the company would look into the crisis situation of the employees. This move from Liberty has made them hopeful and happy at the new ownership," said Sahoo.