NCLT Cuttack orders liquidation of Adhunik Metaliks, group co Zion

Shobha Roy Kolkata | Updated on July 08, 2019

Bench rejects resolution plan of UK-based Liberty House; liquidator appointed

With the UK-based Liberty House Group failing to implement its resolution plan, the Cuttack Bench of the National Company Law Tribunal (NCLT) on Monday passed order for liquidation of Adhunik Metaliks Ltd and group company Zion Steel.

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, has been appointed as the liquidator.

“Considering facts of the case and evidence on record I hold that since the Liberty House Group, the successful resolution applicant failed to implement resolution plan as submitted by them, I cancelled their resolution plan and proceed to pass order of liquidation of corporate debtor as contemplated under Section 33 of Insolvency and Bankruptcy Code, 2016,” the Bench said.

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.

It is to be noted that 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 (CoC) 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.

Delay in resolution plan

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 the NCLT to direct the company to implement the resolution plan by making upfront payment or to pass an order of liquidation.

The NCLAT had, through an order in March this year, directed Liberty House to make upfront payment within 30 days.

“It was obligatory on part of the Liberty House Group to make upfront cash payment within 30 days from the date of the NCLAT order. They did not make it. It is now held that the Liberty House, the successful resolution applicant committed breach of the terms of approved resolution plan approved by the CoC of the corporate debtor,” the Bench pointed out.

The CoC counsel, meanwhile, said that it has received a fresh letter from Maharashtra Seamless, which was the H2 bidder and asked if it may be permitted to consider their resolution plan.

This was also rejected by the Bench, which said that it could not allow the CoC to “restart the corporate insolvency resolution period afresh over and again.”

Published on July 08, 2019

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