The Supreme Court on December 1 set out a deadline of four weeks for implementing the approved resolution bid by Deccan Value Investor LP (DVI) for the bankrupt Amtek Auto.
While closing the proceedings of the case, a bench of Justices MR Shah and Sanjeev Khanna directed all concerned parties to act in order to ensure that the approved resolution plan is brought to fruition “within a period of four weeks from today, without fail.”
The beleaguered auto parts maker was among the companies that featured in Reserve Bank of India’s first list of bankrupt companies to be referred for resolution under the Insolvency and Bankruptcy Code back in 2017.
While pronouncing its judgment the apex court stated in unambiguous terms that any further delay in implementing the resolution plan “shall be viewed very seriously”, noting that deviating from the timeline prescribed under the IBC for resolution process essentially defeats the purpose and object of the insolvency law.
“The approved resolution plan has to be implemented at the earliest and that is the mandate under the IBC,” the Supreme Court said.
The top court had directed DVI to deposit a sum of Rs 500 crores in an order passed in November, which was complied with. In its judgment on December 1, the court said that the amount deposited must be transferred to the lenders and financial creditors as per the approved plan or as is mutually agreed.
The US hedge fund has acquired Amtek Auto with a bid of Rs 2,700 crore leading to the lenders taking home a whopping 79% haircut on the Rs 12,700 crore dues owed by the auto parts maker. Only Rs 500 crore of this resolution bid is to be transacted in cash.
DVI had claimed that while the amount was readily available in one of its Indian accounts, some paperwork had to be completed before the same could be deposited in furtherance of resolution plan. The Supreme Court had however directed the hedge fund to make the deposit by November 24, bringing the resolution process to its fag end.
DVI’s bid for Amtek Auto was approved after the first successful bidder withdrew from acquiring the bankrupt company. Incidentally, DVI too sought to withdraw its resolution plan on various grounds, one of which included distress due to COVID-19. The US hedge fund was not permitted to back-out from the resolution process, with the Supreme Court stopping short of initiating contempt proceedings against it.
After facing several roadblocks, multiple rounds of calling bids for the company, and several rounds of litigation before tribunals and court, the resolution process is now set to be completed by the end of this year, over three years after its initiation.
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