the dirty dozen - western india regional council...gupta resolution order passed 50,000 a 49,473 not...

The Dirty DozenKey learnings from the CIRP processes of the twelve entities referred to NCLT by RBI as part of its first list

A total of 6 entities have seen resolution plans approved by the AA, with 2 entities sent to liquidation and CIRP ongoing for remaining…

Corporate Debtor

Resolution Professional

CIRP StatusEmployee Strength

Public Listing

Financial Creditors Operational Creditors Total

Claims Recovery %age Claims Recovery %age Claims Recovery %age

Bhushan Steel

Vijaykumar V Iyer

Resolution Order Passed

5,000 a 56,022 35,571 63.5% 1,483 1,200 80.9% 57,505 36,771 63.9%

Essar Steel* Satish K. Gupta


50,000 a 49,473 Not Finalized

NA 5,074 Not Finalized

NA 54,547 Not Finalized

NA

Alok Industries

Ajay Joshi Resolution Order Passed

20,169 a 29,524 5,052 17.1% 1,183 63 5.3% 30,707 5,115 16.7%

ElectrosteelSteels

Dhaivat Anjaria


2,245 a 13,175 5,320 40.4% 783 - 0.0% 13,958 5,320 38.1%

Monnet Ispatand Energy

Sumit Binani Resolution Order Passed

2,295 a 11,015 2,892 26.3% 463 25 5.4% 11,478 2,917 25.4%

Jyoti Structures

Vandana Garg


1,365 a 7,365 3,691 50.1% 651 273 42.0% 8,015 3,964 49.5%

Bhushan Power & Steel

Mahendra K. Khandelwal

CIRP Ongoing

7,500 r 47,148 NA NA 743 NA NA 47,891 NA NA

Jaypee Infratech

Anuj jain CIRP Ongoing

184 a 19,375 NA NA 461 NA NA 19,836 NA NA

Era Infra Engineering

Rajiv Chakraborty

CIRP Ongoing

1,549 a 14,690 NA NA 613 NA NA 15,303 NA NA

Amtek Auto Dinkar V CIRP Ongoing

1,360 a 12,605 NA NA 207 NA NA 12,812 NA NA

LancoInfratech

Savan Godiawala

Liquidation Order Passed

3,700 a 45,263 - - 1,278 - - 46,541 0 -

ABG Shipyard Sundaresh Bhat

Liquidation Order Passed

250 a 18,245 - - 457 0 - 18,702 0 -

Claim amounts are in INR cr.

* Petitions regarding final distribution of recovery between FCs and OCs is being heard at NCLAT

Procedural Matters

• IBC to override state laws passed priorto IBC coming into effect

• Withdrawal from insolvency proceedingsu/s12A allowable subject to 90% CoCapproval

• CoC holds the right to change, update,supplement, add to, delay or otherwiseannul or cease the resolution process atany time,

• Bid submission from a potentialresolution applicant after the final bidsubmission date can be accepted as longas it helps in maximisation of value forthe corporate debtor

• CoC to take final decision on complianceincluding 29A, RP to present hisdiligence report after checkingcompleteness)

• No bar on creditors for triggering CIRPunder IBC even if a winding up petitionis pending or admitted before the HighCourt, unless an official liquidator hasbeen appointed and a winding up orderis passed.

Some of the major learnings and precedents across procedural matters, resolution plan related litigation and creditor dues…

Creditor Matters

• Payment to different creditors cannot bedifferential for similarly placedcreditors; resolution plan to be fair andequitable to all creditors.

• Uniform haircut across all classes ofcreditors no discrimination to be madebetween FCs and OCs

• Balance in an account of the corporatedebtor, as on the CIRP commencementdate, cannot be adjudged against debtsof financial creditors

• Home buyers entitled to initiate a CIRPagainst a corporate debtor undersection 7 of the IBC and will also formpart of the committee of creditors

• Creditors free to invoke corporateguarantees provided by the corporatedebtor for its subsidiaries; claims arisingfrom such invocation to be treated inline with other similar claims

• Repayment amongst creditors within thesame class to be done in a pari passumanner basis their dues without regardsto seniority of charges held

Resolution Matters

• An aggrieved resolution applicant canapproach NCLT only after a plan isconsidered by the CoC for voting

• Resolution applicants to seek fornecessary approvals and reliefs fromrespective authorities

• Potential resolution applicants cannotseek for exclusion of certain period fromCIRP under the pretext of amendmentsmade to I&B Code, 2016.

• Section 29A stipulates that an entity isdisqualified from submitting a bid ifpunishment is so severe so as to includeimprisonment for a period of two years.If a potential resolution applicant or arelated party thereof is convicted under‘imprisonment or fine’ under some otherforeign laws, and only monetaryfine/imprisonment for less than 2 yearsis imposed, then there is nodisqualification u/s 29A

• The adjudicating authority should notquestion the commercial intelligence ofthe CoC and should approve a resolutionplan if its equitable to all creditorsinvolved

Bhushan Steel Limited

CIRP Overview

Company OverviewA listed steel asset catering to automotive and consumer durable industries. The company manufactures primary steel products, such as hot rolled coils and billets, which are supplied to automotive manufacturers and used as inputs in secondary steel manufacturing facilities.

The company owed its financial creditors about INR 56,000 cr. The plea by lenders was admitted on 26th July 2017 with the acquisition completed on 21st May 2018.


Vijaykumar V Iyer

Status Resolution order passed

Date of Admission

26th July, 2017

# of resolution applicants

03 (TSL, JSW and employees of BSL)

Total Claims Financial: INR 56,000 cr.Operational: INR 1,422 cr.

Successful Resolution Applicant

Bamnipal Steel Limited (subsidiary of Tata Steel)

Recovery to FCs INR 35,200 cr. (c. 63%)

Overview of CIRP process

• Entire process completed in a period of293 days; one of few cases to becompleted within proposed timeline

• Recovery for FCs to the tune of INR32,500 cr. was provided, along with a12% lender equity stake allowing them tobenefit from potential value appraisalpost acquisition; set a precedent in termsof value recovery through CIRP

• Less delays from frivolous litigationensured low value erosion of thecorporate debtor and adequate recoveryin a time bound manner for allstakeholders

• Operations of the corporate debtor wasmaintained at pre-CIRP levels with afocus to continue the company as a goingconcern with minimal disruptions;cooperation from incumbent employeeswas key to ensure a smooth transition

• All key stakeholders worked in the spiritof the value maximisation. Resolutionprocess was met with keen interest inacquiring the company. The CoC and theNCLT took key decisions in a swiftmanner within the defined time frame

Key Legal Judgements

• NCLT rejected litigation againstsuccessful RA acquisition in record time

• NCLAT rejected pleas from operationalcreditors for priority of payment ongrounds that the resolution plan was fairand equitable to all creditors.

• RA completed the acquisition (includingtransfer of shares) within 36 hours ofthe order by NCLT

• Flagbearer of adherence to IBCtimelines by all stakeholders as part ofthe resolution process (completed in293 days)

Essar Steel Limited

CIRP Overview

Company OverviewIntegrated steel producer with an annual capacity of 10 million tonne per annum in India with a presence in intensive steel consuming markets of Asia and North America

Manufacturing facility comprises ore beneficiation, pellet making, iron making, steel making, and downstream facilities including cold rolling mill, galvanising, pre-coated facility, steel processing facility, extra wide plate mill and a pipe mill


Satish Kumar Gupta

CIRP Status Ongoing

Date of Admission

2nd August 2017


03 (Arcelor Mittal, NuMetal(promoter backed) & JSW)

Total Claims Financial: INR 49,473 CrOperational: INR 5074 Cr


Arcelor Mittal India Pvt Ltd*

Recovery to FCs Proposed recovery of c.86%


• SBI, one of the financial creditors, filedfor IBC in June 2017, the Company wasadmitted for CIRP in August 2017. NCLTapproved the Resolution applicant inMarch’19, however, final negotiations arestill ongoing

• The Company had received interest fromthree parties. The final approvedResolution Plan submitted by ArcelorMittal has provided for an overallrecovery of c.81% for all creditors andc.86% for financial creditors

• Historically, the company was running atnegative PAT with low capacityutilization. During the CIRP process, theRP managed to run the company as agoing concern with improvedperformance and utilisation

• Constantly evolving legal framework e.g.introduction of section 29A (promoternon participation) and introduction ofSection 12A led to a lot of on-goinglitigations which has adversely impactedthe resolution timeline


• IBC to override state laws passed priorto IBC coming into effect

• An aggrieved resolution applicant canapproach NCLT only after a plan isconsidered by the CoC for voting

• CoC to take final decision on complianceincluding 29A, RP to present hisdiligence report after checkingcompleteness)

• Withdrawal from insolvency proceedingsu/s12A allowable subject to 90% CoCapproval

* Identified as successful bidder by CoC

Alok Industries Limited

CIRP Overview

Company OverviewA listed textile company established in 1986, Alok Industries grew to be a textile behemoth with presence in apparels, fabrics, accessories, home textiles etc. The company counts Kohl, Carrefour, Marks & Spencer among its customers.

The company owed its financial creditors about INR 26,600 cr. The plea by lenders was admitted on 18th July 2017 with the acquisition completed on 08th March, 2019.


Ajay Joshi

Status Resolution order passed

Date of Admission

18th July, 2017


01 (consortium of RIL and JMF ARC)

Total Claims admitted

Financial: INR 29,614 cr.Operational: INR 592 cr.


Reliance Industries Ltd & JM Financial ARC

Recovery to FCs

INR 5,052 cr. (c. 17%)


• Entire process completed in a period of602 days

• Recovery for FCs to the tune of INR5,000 cr. was provided, giving recoveryof only 17%; recovery for OCs was onlyfor those with dues less than INR 3 Lacsand total payment to them was INR 4.83crores.

• Consortium of Reliance Industries andJM Financial ARC were the onlyresolution applicant for the company.The plan been rejected by the CoC with70% of lenders voting favourably(approval by 75% of CoC by voting rightswas required u/s 30(4) for approval ofresolution plan)

• Section 30(4) got amended in June2018 which changed approvalrequirement of resolution plan to 66%

• Subsequently, the RP requested theNCLT for withdrawal of liquidationapplication and for re-voting on theearlier plan. Plan got approved by theCoC on June 18, 2018 with approvalfrom 72% of lenders by voting rights


• Conditional approval of resolution planpassed by NCLT with directions to seekreliefs requested from respectiveauthorities. Implementation ofresolution plan to include obtainingnecessary regulatory approvalsincluding clearance from CompetitionCommission of India (CCI)

The resolution order has been challengedat NCLAT by a state-run utilities supplierover preferential treatment towardsoperational creditors. The supplier hadsuccessfully appealed to the NCLT for it tobe recognised as an operational creditor.The approved resolution plan proposespayment to OCs with dues below INR 3lakhs only

Electrosteel Steels Limited

CIRP Overview

Company OverviewElectrosteel Steels Ltd has set up 2.51Million Ton Per Annum (MTPA) GreenfieldIntegrated Steel Plant near Siyaljori village,in the Bokaro district of Jharkhand.TheCompany has established excellence atevery stage of production by bringinginternational expertise and solutions fromreputed manufacturers.

The Company's product range includes PigIron, Billets, TMT Bars, Wire Rods andDuctile Iron Pipes.


Dhaivat Anjaria

CIRP Status Resolution order passed

Date of Admission

21st July 2017


03 (TSL, Vedanta and Renaissance Steel)

Total Claims Financial – INR 13,175 CrOperational – INR 783 Cr


Vedanta Limited

Recovery to FCs

INR 5,320 (c.40%)


• Entire process completed in a period of270 days; one of few cases to becompleted within proposed timeline

• The Resolution Professional submitted 4Resolution Plans before the CoC for theirconsideration. All the members of theCoC approved the Resolution Plansubmitted by Vedanta Limited

• The Resolution Plan envisagedrestructuring exercise – conversion ofdebt into equity, capital reduction andconsolidation and delisting ofElectrosteels

• Operations of the corporate debtor wasmaintained at pre-CIRP levels with afocus to continue the company as a goingconcern with minimal disruptions;cooperation from incumbent employeeswas key to ensure a smooth transition

• All key stakeholders worked in the spiritof the value maximisation. Resolutionprocess was met with keen interest inacquiring the company. The CoC and theNCLT took key decisions in a swiftmanner within the defined time frame

Key Judgment

• Distinction drawn between‘imprisonment or fine’ and‘imprisonment and fine’ in terms ofseverity of indictment

• Section 29A stipulates that an entity isdisqualified from submitting a bid ifpunishment is so severe so as to includeimprisonment. If convicted under‘imprisonment or fine’ under some otherforeign laws, and only fine imposed,then there is no disqualification u/s 29A

Monnet Ispat and Energy Limited

CIRP Overview

Company OverviewEstablished in 1994 Monnet Ispat & EnergyLimited is into manufacturing andmarketing of Sponge Iron, Steel and FerroAlloys.

The Company is in the elite group ofprimary steel producers with a world classintegrated steel plant at Raigarh that has aproduction capacity of 1.5 MTPA toproduce HR plates, rebars and structureprofiles to cater to the rapidly growinginfrastructure & construction industry


Sumit Binani

CIRP Status Resolution order passed

Date of Admission

18th July 2017


01 (Consortium of JSW and AION Investments)



Consortium of JSW and AION Investments Pvt Ltd

Recovery to FCs

INR 2,892Cr (c.26%)


• AION Investments Pvt Ltd and JSW holdholds 70% and 30% stake respectively inthe Consortium

• The Resolution Plan submitted by theConsortium of JSW and AIONInvestments Pvt. Ltd, the only bidder,was approved by the CoC with 98.97%majority

• Approval was also sought from theCompetition Commission of India

• One of the unsecured financial creditor,after dissenting to the Resolution Plan,requested the NCLT to include itself inthe list of an assenter

• The Resolution Plan envisagedrestructuring exercise – conversion ofpart debt into equity, capital reductionand merger. Further, the outstandingstatutory dues were paid off in full

• All key stakeholders worked in the spiritof the value maximisation. Resolutionprocess was met with keen interest inacquiring the company.

Key Judgment

• Once the CoC approves the resolutionPlan, NCLT cannot interfere in thesettlement value assigned to theoperational creditor

• The NCLT directed the RP to includeclaims with respect to guarantees thatare invoked post the commencement ofinsolvency proceedings

Jyoti Structures Limited

CIRP Overview

Company OverviewJyoti Structures Limited is in the businessof execution of projects relating to powertransmission and distribution

The Company is engaged in themanufacturing of transmission line towers,sub-station structures, antennatowers/masts and railway electrificationstructures

Liquidator Vandana Garg

CIRP Status Resolved

Date of Admission

4th July 2017


01 (group of HNIs led by Sharad Sanghi)

Total Claims Financial – INR 7,364 cr.Operational – INR 650 cr.


Group of HNI headed by Mr. Sharad Sanghi

Recovery to FCs

INR 3691 cr (~50%)


• Jyoti Structured Ltd was admitted forCIRP on 4th July 2017 after filing ofpetition by one of the financial creditors.

• The Company received only a single bidfrom a group of HNIs lead by SharadSanghi

• The Resolution Plan received 81%approval, after the voting was re-conducted, on the grounds that themembers of the CoC who abstained fromvoting initially, requested for re-vote andcertain other members who votedagainst the resolution plan in Round 1 ,reconsidered their vote

• The NCLT had rejected the resolutionplan and had ordered liquidation. NCLATreversed the NCLT order and directed theNCLT to hear the resolution plan andasked the resolution applicant to revisethe resolution plan

• The NCLT has approved the resolutionplan on 25th April 2019


• Open to CoC to change its opinion infavour of resolution plan, however CoC,who once vote in favour of theresolution plan cannot change theirviews later

• Supremacy of CoC and their commercialwisdom cannot be questioned

• Security charge created on the assetsshould be disregarded and creditorsshould rank paripasu in terms ofrepayment

Bhushan Power and Steel

CIRP Overview

Company OverviewThe company was incorporated in the year 1999. It is a leading manufacturer of flat and long products and have state-of the-art plants located in Chandigarh, Derabassi, Kolkata and Orissa.

These facilities manufacture value added products covering the entire steel value chain. BPSL has a wide marketing network in both India and abroad for selling its value added product range.


Mahendra Kumar Khandelwal

CIRP Status Ongoing

Date of Admission

26th July 2017


03 (Liberty House Group, JSW and TSL)

Total Claims Financial: INR 47,148 CrOperational: INR 743 Cr


JSW Steel*

Recovery to FCs Proposed recovery of c.41%


• PNB, mandated by the consortium oflenders to BPSL, filed for CIRP under IBCin June 2017, NCLAT had directed theNCLT principal bench to decide on thesuccessful resolution applicant’s bid byMarch’19, however, final judgement isstill awaited

• The Company had received interest fromthree parties. The final approvedResolution Plan submitted by JSW Steelhas provided for a recovery of c.41% forfinancial creditors

• There has been significant delay in theresolution process due to litigation bydifferent stakeholders includingunsuccessful bidders, operationalcreditors and promoters of the company

• The NCLAT had reprimanded the RP forhis failure to follow court orders askingfor representatives of operationalcreditor to attend CoC meetings

• The Punjab and Haryana High Court haspassed ex-parte orders on 18th April2019 asking the NCLT to hear pleassubmitted by the promoters of BPSLagainst the lenders for not sharingresolution plan details


• NCLT, Delhi, had allowed for submissionof bid by a potential resolution applicantafter the final bid submission date,stating that value maximisation shouldbe given higher priority over followingdue process

• NCLAT had observed that theadjudicating authority should ensurethat all creditors are treated similarlyand there is no discrimination betweenFCs and Ocs

• NCLAT upheld the CoC’s right tochange, update, supplement, add to,delay or otherwise annul or cease theresolution process at any time, thusallowing the successful bidder to altertheir basic plan structure even afterfinal submission date

* Identified as successful bidder by CoC

Era Infra Engineering

CIRP Overview

Company OverviewThe company was incorporated in 1990 to pursue opportunities in the infrastructure sector. Era Infra’s major business divisions include the engineering, procurement and construction (EPC) business along with equipment management,

EPC firms primarily derive value through technical credentials, order book and key skilled personnel. The firms hold little value by themselves and CIRP for EPC firms have largely ended in liquidation.

Resolution Professional Mr. Rajiv Chakraborty

CIRP Status Ongoing

Date of Admission 8th May 2018


To be finalised


Resolution Applicant Yet to be decided

Recovery to FCs Pending


• Era Infra was originally admitted for CIRPu/s 7 by the NCLT on 10th August 2017.However, the company already hadseveral winding up petitions filed in DelhiHigh Court. Subsequently, the NCLTproceedings for initiation of insolvencywas initiated by Union Bank of India inFebruary 2018 and the same wasadmitted in May

• The NCLT decided to waive a period of215 days from consideration as CIRP dueto the various delays caused to theprocess form the various winding uppetitions being heard in the high court

• Lenders have proposed a ‘Stalking Horse’bid structure wherein the debt at theconsortium level would be broken intosustainable and unsustainablecategories. The sustainable debt wouldfurther be broken down lender-wisebased on the current security structurewhile unsustainable debt is to beconverted to instruments backed byarbitration claims of the respective SPVs.

• Lenders had received a bid fromSuraksha ARC but the same was rejectedby as no upfront payment was promised


• Special bench of NCLT held that there isno bar on the NCLT to trigger insolvencyresolution process on an applicationfiled under sections 7, 9 and 10 of theCode even if a winding up petition ispending or admitted before the HighCourt, unless an official liquidator hasbeen appointed and a winding up orderis passed. This was held in view of thefact that the NCLT and the High Courtbeing equivalent in law, the former canimpose a moratorium u/s 14 of the codeon cases pending before the latter

• NCLT dismissed petition against EraInfrastructure, a subsidiary of Era InfraEngineering, by one of its financialcreditors, for pushing the former intoinsolvency under grounds of“duplication”, as its parent company wasalready undergoing insolvency whereinthe claims of the FC were being dealtwith. They also held that contractualcommitments are financial debt

Jaypee Infratech Limited

CIRP Overview

Company OverviewJaypee Infratech Limited, was incorporated on April 5, 2007 as a Special Purpose Vehicle (SPV) to develop, operate and maintain the Yamuna Expressway in the state of Uttar Pradesh, connecting Noida and Agra

The company also has the right to develop 25 million square of land along the Yamuna Expressway at five locations for residential, commercial, amusement, industrial and institutional purposes


Anuj Jain

CIRP Status Ongoing

Date of Admission

9th August 2017


To be finalised

Total Claims Financial – INR 9,782 CrOperational – INR 461 CrHome buyers- INR 9,593Cr


To be identified

Recovery to FCs

Not Applicable


• Jaypee Infratech was admitted for CIRPon 9th August, 2017 after filing ofpetition by one of the financial creditors.However the process was restarted againon 9th August, 2018 after inclusion ofhomebuyers as Financial Creditors

• Jaypee Infratech had received interestfrom multiple parties in both the roundsof Resolution plan process. The COC isunder negotiation with top two bidders inthe second round of plan process

• The insolvency process was carried out inspirit of the law. However the process hasbeen restarted based on Supreme Court’sorder. The process has resulted in clarityof treatment of home buyers. However,there has been practical challenges withrespect to participation of home buyersin CoC and voting on key agenda items.

• All major stakeholders worked in spirit ofthe process. The CoC took key decisionswithin the defined time frame. Thevendors and employees worked in alongwith Resolution Professional towards apossible resolution for the Company andthe EOI generated multiple interest forthe company.


• Home buyers will now be entitled toinitiate a CIRP against a corporatedebtor under section 7 of the IBC andwill also form part of the committee ofcreditors

• Public announcement inviting claimsshould offer choice of three insolvencyprofessional to act as the authorisedrepresentative (AR)

• The Authorised Representatives willattend the meetings of the CoC, andvote on behalf of each financial creditorto the extent of his voting share

• Intervention of Supreme Court toprotect the interests of the home buyers

Amtek Auto Limited

CIRP Overview

Company OverviewAmtek Auto, established in 1985, emerged as a key player in the Indian auto component space with over 15 plants across India catering to major OEMs both in India and globally.

Following default in plan implementation by the successful resolution applicant the Resolution Professional and the CoC filed an application with the NCLT against the successful resolution application


Dinkar V Venkatasubramaniam

CIRP Status Ongoing

Date of Admission

24th July 2017


To be finalised

Total Claims Financial: INR 12,604Cr Operational: INR 187 Cr


To be identified

Recovery to FCs

Not Applicable


• Amtek Auto was admitted for CIRP on24th July 2017 and the shortlistedresolution plan was approved by Hon’bleNCLT on 25th July 2018. The CIRP is reinitiated vide NCLT order dates 13thFebruary 2019

• Possible recovery of almost 37% for thefinancial creditors and operationalcreditors, well above the economic valueof the current business. The shortlistedresolution applicant defaulted on theimplementation of the Resolution Planafter it was duly approved by Hon’bleNCLT. The Adjudicating Authority hasordered to consider the H2 resolutionapplicant for process further

• The Resolution Professional has takenmany crucial initiatives like capex formaintenance and repair, monetization ofscrap, weekly reviews for efficientoperational and financial reporting whichhave helped in achieving positiveoperational EBITDA on the company leveland generating cash to sustain itselfdespite acute cash crunch hindering theworking capital, loss of customerschedule and financial distress


• Requirement for EMDs along with EOIsubmission

• Support from financial creditors in theForm of Interim Finance

• Balance in an account of the corporatedebtor, as on the CIRP commencementdate, cannot be adjudged against debtsof financial creditors

• The shortlisted Resolution Applicantfailed to honour the commitments.Consequently, the NCLT ordered toinitiate CIRP from scratch

Lanco Infratech Limited

CIRP Overview

Company OverviewThe company has been involved in the domains of Engineering, Procurement and Construction (EPC), Power, Solar, Natural Resources and Infrastructure over the last two-and-a-half decades

Lanco was one of the leading private sector power developers in India with 3,460 megawatt (MW) under operation and 4,636 MW under construction


Savan Godiawala

CIRP Status Liquidation order passed

Date of Admission

26th July 2017


01 (Thriveni Earthmovers)

Total Claims Financial – INR 45,263 cr.Operational – INR1,278 cr.


None

Recovery to FCs

Not Applicable


• Lanco Infratech was admitted for CIRP on26th July, 2017 after filing of petition byone of the financial creditors.

• Liquidation order against the companywas passed on 27th August, 2018 withthe RP appointed as the official liquidator

• Given that EPC companies have most oftheir assets in the form of intangibles, itmakes sale of such companiesunattractive as compared to asset heavycompanies in steel or power sector

• Additionally, lack of funds andtermination of contracts post initiation ofCIRP makes it extremely difficult for anyEPC company to continue its operations;there is erosion both in terms of skillexodus and order book diminution.

• Liquidation order was passed once thelone resolution plan submitted by ThrivenEarthmovers failed to get requisite CoCapproval despite additional time providedby NCLT.

• Post liquidation orders, most of its powersubsidiaries have also been dragged intoIBC, as lenders look to minimize losses


• NCLT rejected the plea of a potentialresolution applicant seeking to exclude acertain period from CIRP and to allowfor fresh bidding. NCLT held that thecompany could not seek exemptionunder the pretext of amendments madeto section 29A.

ABG Shipyard Limited

CIRP Overview

Company OverviewABG Shipyard Ltd is a part of the ABG Group of companies with diversified business interests. Established in 1985, it is headquartered in Mumbai. It has shipbuilding operations in Surat and Dahejin Gujarat.

Following its acquisition of Western India Shipyard Limited in October 2010, it operated a ship repair unit in Goa which was the largest ship maintenance facility in India. This was subsequently also pushed into insolvency

Liquidator Sundaresh Bhat

CIRP Status Liquidation order passed

Date of Admission

1st August 2017


01 (Liberty house Group)

Total Claims Financial – INR 18,245 cr.Operational – INR 457 cr.


None

Recovery to FCs

Decision to be taken


• ABG Shipyard was admitted for CIRP on1st August 2017 after filing of petition byone of the financial creditors.

• The Company received three EOI’s ,however only one submitted theresolution plan

• The CoC rejected the resolution plan onthe grounds that the repayment termsdid not satisfy the requirements of thecreditors, and also on the grounds thatthe resolution applicant had nothonoured its commitment towards othercompanies where it bid

• Owing to non receipt of resolution plansby any other bidder, the CoC voted infavour of liquidation

• Further the NCLT observed that theCompany has been involved inundervalued and extortionatetransaction

• The NCLT has passed a liquidation orderdated 25th April 2019


• Supremacy of CoC and their commercialwisdom cannot be questioned. Once CoCapproves the liquidation, the NCLT orNCLAT cannot interfere in the decisionunless the decision is perverse ofcontrary to the provisions of the law

• Dues received from Coast Guard,Controller of Defence towards workdone by workers and services renderedby the employees shall not form part ofthe assets of the Company whilecalculating liquidation assets nor itshould be dealt under waterfallmechanism u/s 53 of the IBC, andshould be distributed to the concernedworkers and employees in anappropriate manner

the dirty dozen - western india regional council...gupta resolution order passed 50,000 a 49,473 not...

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