Amtek Auto: Amtek Auto lenders move SC on claiming contempt of bidder
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Lenders, led by
, cited contempt of court because the Supreme Court had, in an earlier ruling, rejected Deccan Value Investors’ request to reassess its offer. “The request for withdrawal of the offer presented by the applicant is rejected and in the event that he would engage in this type of practice, it will be treated as a contempt of this court in view of the various orders issued by this court to his instance” , said a June 18 Supreme Court order reads.
The order was issued in response to a request from DVI claiming that the pandemic had radically altered the financial calculations that formed the basis of its previous offering.
Force majeure occurs when unforeseeable circumstances prevent someone from performing a contract and is usually invoked during events such as natural disasters.
In response to questions from ET, DVI said the pandemic had made its business assumptions for the company “redundant.”
“DVI’s resolution plan indicates that any hardware impact on Amtek’s performance due to a pandemic would allow DVI to exercise force majeure,” the DVI statement said.
“In addition, DVI has integrated into its resolution plan and entered into certain conditions precedent without which the transaction could not continue. One of those PCs involved an ongoing dispute between creditors and tenants of key land on which Amtek’s manufacturing facilities are located. All these questions will now be decided by the courts. Deccan Value Investors is confident in its position and looks forward to an end result that respects the sanctity of the contract under the IBC, ”the company said.
The Supreme Court proceeding could impact multiple insolvency cases where bidders have invoked force majeure clauses to cancel previously made trade commitments on the grounds that Covid-19 affected their financial calculations.
Most notably, bids for Essar, Bhushan Power and Steel and Avantha Group’s power projects have encountered obstacles due to the pandemic.
The DVI offer for Amtek Auto has already been approved by the National Company Law Tribunal.
The auto parts maker was among the first 12 accounts selected by the Reserve Bank of India for insolvency proceedings when the IBC legislation was introduced.
Amtek Auto’s insolvency has been a long-winding event, and a second round of tendering was conducted for the company after some first-round contenders reneged on their bids. DVI was selected in the second round of tendering which ended in January of this year.
The auto parts maker owes the banks around Rs 13,000 crore. DVI had also made a bid for Metalyst Forgings, an associate company of Amtek Auto.
Auto parts makers have been pushing for more government relief to restructure their loans, citing the adverse effects of the pandemic.
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