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The liquidation of Varun Resources Ltd — once India’s biggest liquefied petroleum gas (LPG) ship operator — moved a step closer with an Admiralty court in Mumbai auctioning six vessels, of the debt-laden firm, enbloc on Friday to the UK-based ship recycler NKD Maritime Pvt Ltd for ₹183 crore.
The highest bid of ₹183 crore is less than five per cent of the ₹3,844 crore that Varun Resources owes to banks. The lenders will receive even less than ₹183 crore after deducting outstanding crew wages and ship managers’ dues.
“There were individual valuations for the six ships which came to a total of ₹200 crore. And the highest bid for all six ships was placed by NKD Maritime for ₹183 core, which was about 10 per cent less. The Admiralty court felt that the enbloc sale is better because the amount quoted was higher than single ships,” a lawyer who attended the court proceedings told BusinessLine .
“Varun Resources will now be liquidated,” he said. The proceeds from the sale of the six ships will be first used to pay off the outstanding wages to the ships’ crew and the ships’ manager — Fleet Ship Management Inc —– according to an earlier order of the Admiralty Court, which had arrested the ships at their behest to recover the dues.
The balance will be paid to a consortium of 12 banks led by State Bank of India.
Out of the six ships, five are in Kandla port and one in Kochi port. Another ship was arrested in Fujeirah, which is not part of the sale process initiated by the Mumbai Admiralty Court.
The Admiralty Court put up six LPG ships of Varun Resources under the hammer, a decision the lenders, as secured creditors, agreed to though the shipping company was referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC).
On March 8, the lenders decided to liquidate Varun Resources after rejecting a resolution plan submitted by a third party — Navis Midstream LLC — for the company that was once among the top five globally in this segment.
The sale of the six ships means that they will be dismantled/demolished/scrapped at one of the green recycling facilities run by the Shree Ram Group at Alang in Gujarat. NKD Maritime is Shree Ram’s exclusive partner for cash buying of ships for recycling.
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