Plans to revive Amtek Auto stumbled again as KKR India Financial Services, through Vistra ITCL, approached the dedicated bankruptcy court requesting the tribunal to ensure their rights with regards to secured property stay intact at the time of the approval of the resolution plan. Also, the security trustees are seeking a copy of the resolution plan.
The KKR India Financial Services and L&T Finance have approached the Chandigarh-bench of the National Company Law Tribunal (NCLT), through securities trustee Vistra ITCL, to intervene in the resolution plan proposed by the US-based hedge fund Deccan Value Investors LP (DVI).
The appeal deals with a part of Amtek Auto’s factory land mortgaged with private lenders KKR India and L&T Finance. Interestingly, DVI recently moved the National Company Appellate Tribunal (NCLAT) against the NCLT order arguing a lack of clarity on some aspects of the resolution plan could create impediments in the future.
DVI has stated in its proposed resolution plan that the execution of a long-term lease for the Ace Complex land, where the mortgaged land is situated, is an essential part of the revival plan.
“It is shocking that during the hearing, the resolution professional (RP) himself admitted that the property does not belong to the corporate debtor (Amtek Auto) but to the respondent, no 4 (Gateway Impex Pvt Ltd) and the applicant (security trustee) holds the charge on such property. However, the resolution plan provides for a mechanism for acquiring such property,” said the petition filed by the Vistra ITC.
As per the plea filed by the securities trustees, KKR India Financial Services and L&T Finance had extended a short term loan of about Rs 500 crore to Brassco Engineering and WLD Investments, where Gateway Impex Pvt Ltd was a lessor. On the same land, Amtek Auto is a lessee.
The land has approximately 42% of the machining capacity of Amtek Auto.
According to a person familiar with the development, in DVI’s resolution plan, the execution of a long-term lease for the Ace Complex land on acceptable terms with the prior written consent of Vistra ITCL in favour of Amtek Auto is one of the important conditions for continuing the business. “Non-fulfilment of this condition will lead to the inevitable termination of the Resolution Plan,” said the same person.
Vistra ITCL’s plea claims that lenders hold a charge on the land of around 21.11 acre in Haryana and argued that the secured property is not the asset of the debtor (Amtek Auto) and the company is a lessee on the land.
Lenders have now asked the tribunal to ensure that their rights with regards to secured property should not be affected in any manner at the time of the approval of the resolution plan.
“A bid for an IBC asset must be commercially viable. That is why DVI sought and gained the agreement of the creditors to include certain critical commercial protections at the outset,” said a person familiar with the development. “It is simply not true to say DVI has asked to withdraw; the reality is the plan cannot move forward if the commercial conditions have not been resolved by the CoC.”
When contacted, Vistra ITCL, KKR India and DVI declined to comment. Email queries to L&T Finance and Dinkar Venkatasubramanian, RP of Amtek Auto remained unanswered till the time of filing the story.
On July 9, the NCLT approved DVI’s Rs 2,700 crore bid for Amtek Auto. The company was part of RBI’s first list of 12 debt-laden companies for mandatory resolution. The company had total debt of over Rs 12,700 crore at the time of admission in the bankruptcy court.
Source: Economic Times