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

Deccan Value Investors (DVI) attempts to wriggle out of the Amtek Auto corporate insolvency resolution process (CIRP) has faced another set back after the Supreme Court dismissed its plea seeking rectification of the apex court’s earlier order rejecting DVI’s requests for withdrawal of its resolution plan.

The Supreme Court in its order also directed the US-based global investment fund that it will not enforce the force majeure clause, which the fund had tried once in order to ‘renege’ on its promises made under the resolution plan.

The Supreme Court, however, said that DVI’s appeal against the approval of the resolution plan by the NCLT should peremptorily be heard and disposed of by the in National Company Law Appellate Tribunal (NCLAT) within a period of one month from the date of the present judgment.

The court also dismissed the plea of the Committee of Creditors in the Amtek Auto CIRP asking for initiation of contempt proceeding against DVI for not following the Supreme Court order dated 18 June 2020.

Deccan Value Investors had emerged as the successful resolution applicant after the earlier successful applicant – Liberty House – failed to adhere to terms of its resolution plan. The CoC had approved DVI’s plan in February 2020 following which the resolution professional had asked DVI to make the payment of the balance Rs 150 crore bank guarantee.

DVI had later filed an application before the Supreme Court on 12 June 2020 seeking a grant of a period of two months to it to examine and understand the impact of the onset of COVID-19 and to re-evaluate the resolution plan.

Deccan Value Investors had pleaded that due the outbreak of the COVID19 pandemic…, the business/assets/revenues of the Corporate Debtor have been adversely and materially affected, and as such had materially and adversely impacted commercial assumptions underlying the business plan and financial proposal for revival of the Corporate Debtor and the feasibility and viability of the Resolution Plan.

In a way, DVI wanted to withdraw its resolution plan, which was thwarted by the Supreme Court in its 18 June 2020 order where it said: “The application made by the applicant (DVI) for withdrawal of the offer is hereby rejected and in case he 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 his instance.”

In the meantime, NCLT passed an order on 9 July 2020 approving the resolution plan submitted by Deccan Value Investors.

However, when DVI failed to make the payment of the balance Rs 150 crore bank guarantee amount, and instead informed the RP that it would file an appeal against the NCLT order approving the resolution plan, the CoC moved a contempt petition in the Supreme Court.

Now, the ball is in the NCLAT court, and only it can now give any relief, if any, to Deccan Value Investors.

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