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London-based Liberty House fails to make the payment for Amtek Auto

Lenders will now seek court's directions on penal action against the London-based firm. A Liberty House source said the company has asked for an extension from banks

Aditi Divekar & Dev Chatterjee  |  Mumbai 

Amtek Auto
Representative image

London-based failed to make the payment for on Thursday as the deadline set by the lenders came to an end, throwing the entire debt resolution process off track. The company had made the winning bid for in July this year at Rs 42 billion but has not paid any amount to banks to date, said a source close to the development.

Lenders will now seek directions from court whether to initiate action under Section 74(3) of the (IBC). The section is triggered when the bidder defaults on a court-approved plan, and can result in a jail term of up to five years and a fine of up to Rs 10 million or both.

“This is a violation of an NCLT (National Company Law Tribunal) order. The banks are entitled to take action against the resolution applicant now as per the law,” said Alok Dhir of Dhir & Dhir Associates. The bids will have to be called again or the company will be sent for liquidation. The company’s liquidation value was Rs 40 billion.

When contacted, a source said the company has asked for an extension from banks. “We have already asked for extension and some litigations are also pending. I don’t think there is any issue,” he said, without elaborating. had bid for four assets in India but is unable to make payments, raising a question mark over the vetting process while inviting bids for stressed assets.

was referred to the insolvency tribunal under the 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 banks taking 67 per cent haircut in the process. “We were waiting for the 15 per cent of the bidding amount but Liberty House was unable to pay even that. Thursday was the deadline for 100 per cent payment,” said a source close to the development.

At the time of bidding, Liberty House had promised to invest an additional Rs 10 billion into the company over the next two-three years and Rs 5 billion immediately. Amtek Auto’s assets are spread across the world and employs 6,000 people.

Liberty House also won the race for Adhunik Metaliks but did not pay the banks, citing a pending case between Adhunik and state-owned MSTC. The MSTC vs Adhunik case will be heard on December 11.

Lenders have taken an average of 56 per cent haircut in the Reserve Bank of India’s (RBI's) first list of 12 companies, while in some cases banks have failed to get even 10 per cent of their dues. In July and December last year, the RBI identified 40-odd for debt resolution under the Several amendments made to the code have resulted in litigation among the bidders and challenges from the promoters of these

First Published: Fri, November 23 2018. 00:50 IST
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