Companies

NCLAT stays liquidation order against Adhunik Metaliks

Our Bureau Kolkata | Updated on July 22, 2019

The National Company Law Appellate Tribunal (NCLAT) on Monday stayed the liquidation order passed against Adhunik Metaliks by the Cuttack Bench of the National Company Law Tribunal (NCLT) on July 8.

The stay order was given following appeal made by UK-based Liberty House Group before NCLAT.

“The NCLAT passed an order dated July 17, stating that the operation of the impugned order of liquidation (order dated July 8) shall remain stayed,” Adhunik said in a notification to the stock exchanges on Monday.

Liberty House had emerged the successful resolution applicant for Adhunik Metaliks. However, since it failed to implement its resolution plan, the Cuttack Bench of NCLT had passed order for liquidation of Adhunik Metaliks Ltd and group company Zion Steel.

Resolution plan

The bench, comprising Justice M B Gosavi, Member (Judicial), cancelled the resolution plan of Liberty House and ordered that Adhunik Metaliks, which has more than 1,500 workers and employees, would be liquidated as a “going concern”. Sumit Binani, the interim resolution professional, was appointed as the liquidator.

The bankruptcy proceedings against Adhunik Metaliks, its subsidiary Orissa Manganese & Minerals (OMML), and group company Zion Steel were admitted by the Kolkata bench of NCLT in August 2017. State Bank of India had filed application to initiate the insolvency process against the companies as they committed default in paying debt of more than ₹747 crore.

The Resolution Professional for Adhunik had received two resolution plan — one from the Sanjeev Gupta-led Liberty House and the other from Maharashtra Seamless, a part of the DP Jindal Group.

The Committee of Creditors of Adhunik Metaliks approved the resolution plan of UK-based Liberty House with a majority of 99.94 per cent even while it rejected the plan of Maharashtra Seamless as it had suggested less value than the liquidation value of the company.

The Kolkata bench of NCLT had approved Adhunik’s resolution plan in July 2018. However, while passing approval of the resolution plan, the adjudicating authority had rejected MSTC Ltd’s contention of settling their claim of ₹108 crore. Subsequently, MSTC filed appeal which was dismissed by the NCLAT in March this year. Following this, MSTC filed second appeal against the NCLAT order which was also rejected by the Supreme Court.

Upfront payment

Pending the appeal filed by MSTC, the successful resolution applicant Liberty House Group did not take steps to implement resolution plan by making upfront payment. On this, the CoC of Adhunik had filed an application requesting NCLT to direct the company to implement the resolution plan by making upfront payment or to pass an order of liquidation.

NCLAT had, through an order in March this year, directed Liberty House to make upfront payment within 30 days. Since Liberty House did not make the upfront cash payment within 30 days the NCLT bench considered it breach of the terms of approved resolution plan approved by the CoC.

Published on July 22, 2019

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