Insolvency case: NCLT allows plea for private sale of ABG Shipyard assets

Clipped from: https://economictimes.indiatimes.com/industry/transportation/shipping-/-transport/insolvency-case-nclt-allows-plea-for-private-sale-of-abg-shipyard-assets/articleshow/79566260.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Synopsis

The ruling by the dedicated bankruptcy court is expected to set a precedent in cases where the company is already admitted for liquidation and auctions have not brought in buyers.

Mumbai: The liquidator of ABG Shipyard has been permitted to sell its assets privately, since four attempts through auctions failed to yield any results.

The ruling by the dedicated bankruptcy court is expected to set a precedent in cases where the company is already admitted for liquidation and auctions have not brought in buyers.

Sundaresh Bhat, the liquidator for ABG Shipyard, told the Ahmedabad bench of the National Company Law Tribunal (NCLT) that four attempts to auction the company’s assets had failed and if the tribunal allows private sale of its assets as per rules, the lenders may get buyers.

On December 2, the bench comprising preceding judicial member Manorama Kumari and a technical member, C Thirunavukkarusu, allowed the plea for private sale of the assets.

The average liquidation value of ABG Shipyard’s assets is about Rs 1,480 crore.

The liquidator had published its first advertisement for the first electronic auction of the company’s assets in September 2019. However, when there was no reliable bid, the liquidator attempted three more auctions with reduced prices, which also did not result in any concrete queries, according to the petition.

“With four failed attempts and fifth auction process ongoing, the applicant (liquidator) also attempted to understand the local market scenario and learnt that there is a possibility to attract few buyers considering the fact that the reserve price has undergone reduction due to failed auctions,” the liquidator said in his plea.

ET has reviewed a copy of the petition.

Bhat, who is also partner and leader of resolution process advisory at consultancy BDO, was not immediately available for comment.

“The order is a reprieve for the liquidators as auctions have been failing due to Covid-19 and related aspects,” said Nipun Singhvi, an advocate who represented the liquidator along with Mumbai-based law firm AKR Advisors.

“The private sale shall help the liquidator as well as bankers to liquidate faster and efficiently and will set a precedent in future cases as well,” Singhvi said

The liquidator had also sought that a successful bidder be given 90 days to pay for the assets instead of 15 days, as per amendments in July 2019.

Earlier, a successful bidder had to pay within 15 days from the date of the auction, but on July 25, 2019, the timeline was extended to 90 days.

However, since ABG Shipyard was admitted under the liquidation process prior to the amendment, the liquidator sought the tribunal’s intervention to allow that its case be included under the amendment.

The NCLT bench, however, rejected the 90-day payment timeline for buyers since the amendments were not retrospective in nature and the tribunal had ordered for the liquidation before July 25, 2019.

ABG Shipyard is part of the Reserve Bank of India’s so-called first list of 12 cases for mandatory resolution.

The company owed over Rs 18,000 crore to its financial and operational creditors at the time of passing the liquidation order by the tribunal.

The NCLT had ordered liquidation in April 2019 after the company failed to receive any viable offer for revival.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s