Gear wheels sit in a rack of an automotive component washing machine at the Mahindra & Mahindra manufacturing plant in Chakan, Maharashtra, India. (Photographer: Dhiraj Singh/Bloomberg)

Amtek Auto Becomes Fifth Of The Twelve Large Bad Loan Accounts To Be Resolved

London-based firm Liberty House UK has received the National Company Law Tribunal’s approval to acquire Amtek Auto Ltd. under the Insolvency and Bankruptcy Code, two people in the know confirmed. This makes Amtek the fifth of the 12 large stressed accounts, referred for bankruptcy proceedings in June 2017, to get resolved.

A spokesperson for Liberty House confirmed that the firm has received NCLT approval to take over Amtek Auto. The deal adds “a major new asset portfolio to our international network,” the spokesperson said in an emailed statement.

Financial creditors of Amtek Auto are owed nearly Rs 12,312 crore, according to details of the admitted claims on the Amtek Auto website.

The first of the two people quoted above, a senior public sector banker, said that financial creditors would be taking a roughly 75 percent haircut on their outstanding loans. Operational creditors are owed nearly Rs 224 crore.

Also read: Amtek Auto: The Odd One Among RBI’s 12 Bad Apples 

On April 5, Amtek Auto informed stock exchanges that the committee of creditors led by IDBI Bank had approved Liberty House’s bid. However, later that month, lenders to ABG Shipyard Ltd were informed that Liberty House--which was the sole bidder for the company--had defaulted on repaying its dues to Exim Bank Ltd and thus was not eligible to bid for companies under the IBC. That led to uncertainty on whether Liberty House’s bid for Amtek would go through.

According to the people quoted above, Liberty House has cleared all its pending dues and is now eligible to participate in the bidding process.

This is the second company that Liberty House has managed to bag under the IBC. The London-based investor had received lenders’ approval to take over Adhunik Metaliks Ltd, on July 5.

Resolution Progress: One Deal At A Time

Amtek Auto is one of the 12 large corporate accounts which were sent for insolvency proceedings, after the Reserve Bank of India (RBI) asked banks to do so in June 2017. Of that list, five have now seen final deals being signed.

Steel sector accounts, including Bhushan Steel, Electrosteel Steels and Monnet Ispat, have been among the early ones to be resolved.

The haircut taken by bankers was the least in the case of Bhushan Steel and the most for Alok Industries.