INSUBCONTINENT EXCLUSIVE:
Mumbai: The National Company Law Tribunal (NCLT) has ordered liquidation of ABG Shipyard, one of the first of the ‘dirty dozen’ accounts
Reserve Bank of India red flagged for insolvency proceedings under the newly introduced Insolvency and Bankruptcy Code (IC) two years ago,
despite protests from sole bidder Liberty House that claimed its offer for the company exceeded its liquidation value.
The liquidation
orders were pronounced at a court room on Friday after Liberty House’s plea was heard by the tribunal.
Liberty House had claimed that it
offered a sum higher than the liquidation value of the company and urged the tribunal to entertain its bid.
The UK-based group, which has
diversified business interests covering steel, financial services and auto parts, had promised upfront payments to banks of around Rs 400
crore with the remainder to be paid over 5-10 years, according to people in the know.
ABG Shipyard’s liquidation value was pegged at a
little over Rs 2,000 crore by an independent valuer
The company owes a consortium of banks around Rs 16,000 crore.
Liberty House has been unable to meet its commitments to lenders in at least
two other situations where it has submitted bids for companies going through insolvency proceedings resulting in the bankers rejecting its
resolution plan, sources in the know said.
The Sanjeev Gupta-led company did not furnish details of financial backing for its bid for
Bhushan Power and Amtek Auto within the stipulated time frame
“The court has orally passed orders for liquidation today, we are awaiting written orders,” said Link Legal’s partner, Siddharth
Srivastava is representing the resolution professional of the company, Sundaresh Bhatt.
ICICI Bank leads the consortium of lenders that
initiated the insolvency proceedings against ABG Shipyard as it has the single largest claim amongst the 22-bank consortium.
Bhatt, who is a
partner at Dutch advisory firm BDO, had ordered a second round of bidding last year after expressions of interest by suitors such as
Shapoorji Pallonji and Mahindra Mahindra did not result in concrete financial offers
Liberty House was the sole bidder in the first and second rounds of bidding
ABG Shipyard is in the business of shipbuilding and breaking down of obsolete vessels.
“Most of the infrastructure will be sold as scrap
now during the liquidation process,” a banker in the know said
The vessel maker is the second shipbuilding company to be pushed into liquidation after Bharati Defence and Engineering
Both companies had coveted contracts from the Indian Navy to manufacture vessels.