US-based hedge fund Deccan Value Investors (DVI) has accused Amtek Auto’s Resolution Professional of going against “the spirit and letter of the Insolvency and Bankruptcy Code” by not providing any financial information related to the company since June.
DVI is the top bidder for acquiring Amtek Auto under the NCLT-led insolvency process but has invoked the force majeure clause due to deterioration in industrial activity across sectors following the Covid-19 pandemic.
Vinit Bodas, Managing Partner, Deccan Value Investors, told BusinessLine that the resolution plan was submitted in good faith, but the agreement has not been honoured by the CoC.
‘Force majeure’ clause
“We have no idea how the company has been performing in recent months. The RP has not provided any information on the financial performance of Amtek since June, despite multiple requests from us, which is against both the spirit and letter of the IBC,” he said in response to a query sent by this newspaper.
The lenders of Amtek Auto, led by Union Bank of India, have moved the Supreme Court against Deccan Value Investors for exercising the force majeure clause in its resolution plan. “The (force majeure) clause was discussed and negotiated transparently with the CoC and the RP, who agreed to its inclusion.
“Therefore, we are quite surprised that both the CoC and the RP are refusing to accept their side of the contract which they themselves voluntarily agreed to, while insisting that we perform our side of the bargain,” said Bodas.
During this prolonged period, an insolvent company will not only lose market share but is often also precluded from bidding for new contracts.
And “that’s before you price in the impact of Covid-19 on the auto industry and the company’s performance,” he said.