Clipped from: https://economictimes.indiatimes.com
The three year old case for the resolution of bankrupt Amtek Auto could finally see completion this week after the Supreme Court (SC) refused to give more time for US based hedge fund Deccan Value Investors LP (DVIL) to assess the impact of the economic contraction caused by the Covid-19 virus.
The three year old case for the resolution of bankrupt Amtek AutoNSE 0.00 % could finally see completion this week after the Supreme Court (SC) refused to give more time for US based hedge fund Deccan Value Investors LP (DVIL) to assess the impact of the economic contraction caused by the Covid-19 virus. Amtek was among the 12 debt laden companies taken to the National Company Law Tribunal (NCLT) on the directions of the Reserve Bank of India (RBI). The auto parts maker owes lenders Rs 12,700 crore and has been awaiting resolution under the bankruptcy process since 2017.
In February lenders led by IDBI BankNSE 4.69 % and State Bank of India (SBI) agreed to the Rs 2,700 crore offer from the US-based investor, a 80% haircut to the total dues from the company. DVIL the winning bidder was chosen after a Supreme Court directed second round of bidding because the previous winner UK based Liberty House failed to make the payment in July 2018. Bankers were worried that the two year process to find another buyer for Amtek would come go nought after DVIL petitioned the SC seeking to reassess its bid in light of the economic crisis caused by the Covid-19 pandemic.
“That the Supreme Court has disallowed any more time is a huge relief for us. It means that DVIL has to make the payment after the NCLT comes which we expect anytime this week. Also the fact that this order is from the SC gives us some certainty that there will be no more delays in atleast this case,” said a senior bank executive in charge of this case The law gives 30 days for the buyer to complete payment after the NCLT order and bankers said they can expect some recovery by the end of July at the latest. In an order posted on the SC website the three judge bench of justice Arun Mishra, S Abdul Nazeer and M R Shah dismissed DVIL’s application seeking more time to reassess its offer and indicated that no further delays will be entertained.
“The application made by the applicant for withdrawal of the offer is hereby rejected and in case he indulges in such kind of practice, it will be treated as contempt of this court in view of the various orders passed by this court at his instance,” the SC said referring to the various extensions given earlier to find a buyer for Amtek. To be sure, most of the recovery coming from DVIL is through future receivables of Amtek, which assumes recovery from tax refunds, sale of non core real estate and other assets of the company to be distributed to lenders later. The cash component is just Rs 500 crore or less than 5% of the amount owed by Amtek.
However, bankers are taking whatever recovery that comes their way as the economic slowdown caused by the pandemic has hit valuation of bad assets. Bankers are bracing for winning bidders like DVIL to delay payments. “We expect more such challenges going forward and are accordingly preparing our defence,” said another senior banking executive. Bankers now await the final NCLT approval which is likely later this week.