Sanjeev Gupta, executive chairman of Liberty House Group, speaks during an interview. (Photographer: Chris Ratcliffe/Bloomberg)

IBC: IBBI Files Criminal Case Against Liberty House

India’s bankruptcy regulator has filed criminal charges against the U.K.’s Liberty House Group for backing out after successfully bidding for Amtek Auto Ltd.

The group “intentionally and wilfully” contravened the conditions laid down under the resolution plan, the Insolvency & Bankruptcy Board said in a criminal case filed at a Gurugram court.

Sessions Judge Rajiv Kumar Sondhi prima facie found wilful contravention and ordered Sanjeev Gupta, Rajiv Bajaj, Doughlas Dawson and Derek O’Reilly to be present at the next hearing on July 11—BloombergQuint has reviewed a copy of the order.

Liberty House won the bid for Amtek Auto under the Insolvency and Bankruptcy Code proceedings, and the Chandigarh bench of the National Company Law Tribunal approved its offer in July 2018. The committee of creditors then set up a panel to implement the resolution plan.

The U.K.-based investor, however, backed out citing gaps in the bidding process conducted by the resolution professional. Liberty House said it had not been provided adequate information, and didn’t want to continue with its plan after closely reviewing Amtek Auto’s accounts

The creditors then moved the NCLT, alleging that the investor had wilfully backed out. The tribunal agreed with them and said the board may move against Liberty House as per the regulations laid under the bankruptcy code.

According to Section 74(3) of the code, any party that violates conditions laid under the resolution plan will be liable to prosecution and can face a prison term of up to five years along with a penalty of up to Rs 1 crore.

Since the maximum punishment prescribed under the code for such contravention is more than two years, the sessions court agreed to hear the matter as a special court constituted under the provisions of Section 435 (1) of the Companies Act.

Liberty House had also backed out of a bid for Amtek Auto’s subsidiary, ARGL Ltd. despite the NCLT’s order. This came after Liberty House declined to submit a bank guarantee as required under the insolvency process.

Also read: NCLAT Allows Withdrawal Of Liberty House Bid For Amtek Auto Subsidiary

Statement from Liberty House:

Liberty House Group has not received any notification of such case but meantime it has already filed its appeals in NCLAT on this matter against NCLT Chandigarh order which are currently sub-judice. If it receives notice of this case it will similarly defend the matter. Liberty House has clear evidence that Amtek Resolution Professional RP and its previous owners and management grossly misrepresented the information on assets and their values in information memorandum. These fraudulent acts and misinformation have vitiated the entire CIRP of Amtek. Liberty House Group is willing to resolve the matter providing it is given a chance to suitably modify its resolution plan in accordance with corrected information.