The Mumbai bench of the National Company Law Tribunal (NCLT) has given its nod to Metalyst Forgings’ acquisition by Deccan Value Investors LP-led consortium for ₹1,600 crore against the admitted liabilities of ₹3,907 crore.
“It (resolution plan) shall be binding on the corporate debtor (Metalysts Forgings), its employees, members, and creditors, including the central government, any state government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is due, guarantors and other stakeholders involved in the resolution plan,” the division bench of justice VG Bisht and technical member Prabhat Kumar said in its May 14 order.
The Arvind Dham-promoted auto parts maker was originally admitted for the resolution process in December 2017. During the process, other bidders, Liberty House Group and Bharat Forge, had also shown interest in acquiring the company.
However, Deccan Value Investors was declared the highest bidder and in August 2018, the committee of creditors approved the company’s resolution plan with a majority vote of 87.57%.
The resolution delay stemmed from the bidder’s application that sought withdrawal after the bid was approved by the lenders. Deccan Value Investors sought to withdraw its plan citing flaws in the sale process, including “misrepresentation of material facts” and “non-disclosure”. Deccan Value Investors argued in its application that it wanted to withdraw the proposal, claiming discrepancies between the information shared by the resolution professional and what existed on the ground. It claimed that EY-backed resolution professional Dinkar Venkatasubramanian withheld critical information. The latter has denied these charges.The Mumbai bench of the NCLT allowed Deccan Value Investors’ application and rejected the resolution professional’s application to approve the plan. Subsequently, the National Company Law Appellate Tribunal (NCLAT) upheld the tribunal’s order.
On March 6, the Supreme Court, while setting aside the NCLAT’s order, ruled that a bidder cannot retract once the lenders approve the plan. It said resolution plans are not prepared and submitted by law persons. “They are submitted after the financial statements and data are examined by domain and financial experts, who scan, appraise (and) evaluate the material as available for its usefulness, with caution and scepticism,” the apex court said.
