Lenders to ABG Shipyard Ltd. have rejected a resolution plan submitted by Liberty House UK for the second time, two people in the know confirmed. The Committee of Creditors rejected the bid unanimously at a meeting on Monday, these people said.
According to the people quoted above, Liberty House's bid was disqualified as it was seen to be in violation of Section 29(A) of the Insolvency and Bankruptcy Code. Among other things, the section does not allow promoters of companies which are tagged as non-performing assets for one year to participate in the bidding process. BloombergQuint could not ascertain the specific rationale given by lenders to Liberty House in rejecting their bid.
"We cannot comment on the issue as this is an on going process. Things may take any turn in the next 24 hours," a spokesperson for Liberty House told BloombergQuint.
ABG Shipyard owes over Rs 18,000 crore to its financial creditors. The committee had declined to approve the first bid submitted by Liberty House last month, as it was below the liquidation value of ABG Shipyard. Liberty House then came back with a revised bid, which was rejected on Monday.
The committee and the resolution professional to ABG Shipyard have less than two weeks to complete the bidding process and find a legitimate bidder, as the 270-day deadline ends on April 28. Following this deadline, the company may go into liquidation as per the provisions of the IBC.
The disqualification of Liberty House's bid due to provisions of Section 29(A) of the IBC could also have implication on other cases, where Liberty House has expressed interest. Lenders to Amtek Auto Ltd. are said to have approved the bid submitted by Liberty House. On Monday, Amtek Auto informed stock exchanges that the company has submitted a resolution plan to the Chandigarh bench of the NCLT for final approvals.
The U.K.-based firm has also submitted a bid for Bhushan Power & Steel Ltd. That bid was submitted after the deadline ended and its eligibility is being determined by the National Company Law Tribunal.
ABG Shipyard, Amtek Auto and Bhushan Power & Steel are all part of a list of 12 large corporate accounts, which are being resolved under the insolvency process, after the Reserve Bank of India shortlisted them in June 2017. According to a March 21 report by brokerage CLSA, the first 12 cases accounted for about Rs 2.77 lakh crore in bad loans.