Is the unending CIRP saga of Amtek Auto finally coming to a closure?

Would the Corporate Insolvency Resolution Process (CIRP) of Amtek Auto finally see the light of the day after the Supreme Court’s chastised all the concerned parties for delaying the closure of the process for time immemorial?

The Supreme Court in a recent order on 1 December 2021 has directed “all the concerned parties to the approved resolution plan and/or connected with implementation of the approved resolution plan including IMC (implementation and Monitoring Committee) to complete the implementation of the approved resolution plan, within a period of four weeks from today, without fail”.

Amtek Auto’s CIRP started way back in 2017, but it has not seen any closure even after four years – despite approval of two resolution plans by two resolution applicants. The CIRP of Amtek Auto, it seems, has been jinxed, and it has to be seen if this time around the insolvency process finally ends in a resolution.

The Supreme Court in its recent order has further directed: “It goes without saying that on implementation of the approved resolution plan and even as per the approved resolution plan, an amount of Rs. 500 crores now deposited by DVI-successful resolution applicant be transferred to the respective lenders/financial creditors as per the approved resolution plan and/or as mutually agreed.”

It ended its order with an stern warning: “Any lapse on the part of any of the parties in implementing the approved resolution plan with the time stipulated hereinabove shall be viewed very seriously.”

The story thus far

The corporate insolvency resolution process was initiated against Amtek Auto Limited on 24 September 2017. A resolution professional was appointed. An advertisement was published by the resolution professional inviting prospective resolution applicants to submit a Resolution Plan by 31 August 2017. The Resolution Plans submitted by Deccan Value Investor (DVI) and Liberty House Group Private Limited were considered by the Committee of Creditors (CoC).

However, DVI withdrew its resolution plan and therefore the revised plan of Liberty was considered and approved by the COC on 2 April 2018. Subsequently, the resolution plan submitted by Liberty came to be approved by the National Company Law Tribunal, Chandigarh Bench, Chandigarh on 25 July 2018. However, the successful resolution applicant – Liberty did not act as per the approved Resolution Plan.

Following this the CoC filed a petition in NCLT informing that the successful resolution applicant – Liberty has failed to act as per the approved Resolution Plan and it requested the tribunal to reinstate the CoC and the resolution professional to ensure that the Corporate Debtor remain as a going concern. Further prayer was made to grant 90 days to the resolution professional to make another attempt for a fresh process rather than forcing the Corporate Debtor into liquidation on account of fraud committed by Liberty.

However, the NCLT did not accede to the request for carrying out a fresh process by inviting the plans again but directed the reconstitution of the COC for re-consideration of the Resolution Plan submitted by DVI.

The CoC then moved the NCLAT against the tribunal’s order. The NCLAT allowed the resolution professional to invite fresh applications from prospective resolution applicants and called upon them to submit their resolution plans. Three resolution applicants, including DVI, put in their bids on 31 May 2019. However, DVI’s plan was was rejected and it was declared as an ineligible resolution applicant. Against the said rejection, DVI filed an appeal before the appellate authority, which held that in light of the earlier order dated 20 May 2019 the CoC was required to consider all resolution plans subject to the pending appeal.  The DVI submitted the revised resolution plan.

However subsequently, the appellate authority by the impugned judgment and order disposed of the appeal filed by the COC and rejected the prayer for exclusion of time. Consequently, virtually ordered the liquidation of the Corporate Debtor.

This forced the CoC to move Supreme Court, which on 6 September stayed the liquidation order.

The apex court later on 24 September 2019 permitted the resolution professional to invite fresh offers within a period of 21 days. This Court further passed an order that within two weeks thereafter, the COC should take a final call in the matter and the decision of the COC and the offers received be placed before this Court. DVI also submitted the fresh resolution plan which was approved 5 by the COC with 70% majority.

Also Read: Second time unlucky for Amtek Auto as DVI withdraws resolution plan

DVI backs off

But by the time the CoC approved DVI’s resolution plan, the latter had a change of mind. It tried to withdraw from resolution plan. However, the Supreme Court rejected by the withdrawal request through an order dated 18 June 2020. This Court further observed that in case the DVI indulges in such kind of practice, it will be treated as contempt of this Court in view of the various orders passed by this Court at its instance.

The resolution plan submitted by the DVI was approved by the NCLT in July 2020. But since the approved resolution plan submitted by the DVI was not acted upon by the DVI, the CoC filed Contempt Petition before Supreme Court.

DVI also filed an application for rectification of the earlier order dated 18June 2020 by which the apex court had rejected the prayer of the DVI for withdrawal of the offer. The court in an order on 23 February 2021, dismissed the application for rectification filed by the DVI of Supreme Court’s  18 June 2020 order.

The Supreme Court also directed that the appeal filed by the DVI against the approval of the resolution plan should peremptorily be heard and disposed of by the appellate authority within a period of one month from the date of the said judgment.

On 16 April 2021, the appellate authority dismissed the appeal preferred by the DVI which was filed against the order passed by the adjudicating authority dated 9 July 2020 approving the resolution plan submitted by the DVI itself.

Thereafter, the Resolution Plan submitted by the successful resolution applicant – DVI was to be implemented and acted upon by the DVI.

Later the Supreme Court had directed the parties to submit the status report on implementation of the approved resolution plan submitted by DVI. In the status report filed by DVI on 23 November 2021, it said that it was committed towards its approved resolution plan and has been taking active steps towards its implementation.

Also Read: SC foils another attempt of Deccan Value Investors to wriggle out of Amtek Auto insolvency case