Amtek Auto may be one of the first companies from the auto component sector to go into liquidation following an order passed by the National Company Law Appellate Tribunal, NCLAT. This is significant in view of the frenzy surrounding the crisis in the country’s automobile sector and how the component industry is taking the heaviest hit.
The Amtek Auto case however is an old one with the company notching up a debt of Rs 12,603 crore. The company first went to the NCLT for corporate insolvency resolution process (CIRP) way back in 2017. There have been some back and forth with a proposal for resolution being received and then the proposer backing out.
Liberty House was the company which submitted a bid to the NCLT agreeing to settle the dues at Rs 4,025 crore. The company later withdrew its offer saying it was taken for a ride by Amtek Auto. According to Liberty House, “blatant discrepancies in the condition of machineries, valuations, and representations made in the information memorandum and valuation reports”.
This put the Committee of Creditors (CoC) and the resolution professional (RP) on the back foot. They felt Liberty House had breached the law in backing out and actions must be initiated against the company. They wanted the NCLAT to allow for extension to search for another suitor to bid for Amtek Auto.
All that has been set to rest by the current order by the NCLAT. The tribunal has told the NCLT Chandigarh unit to deal with the case on an expeditious basis since the 270-day period is long over.
The CoC and RP have been put on notice by the NCLT for delaying the process of liquidation of the Chandigarh-based Amtek Auto and told them to go ahead and initiate the liquidation process. On the question of taking action against Liberty House, the advice given to them was to first give an opportunity to Liberty House to explain their position.
The request by the CoC and RP to consider some of the offers made by parties other than Liberty House has also been turned down by the tribunal. This paves the way for liquidation proceedings to be started at the NCLT forthwith.