Yet another large defaulter, ABG Shipyard Ltd., on Tuesday saw insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) 2016 being initiated by the Ahmedabad bench of National Company Law Tribunal (NCLT).
The bench, chaired by Justice Bikki Raveendra Babu, admitted the petition for insolvency proceedings initiated by lender ICICI Bank against ABG Shipyard Ltd for its debt default of over Rs 4,500 crore. Justice Babu appointed Sundaresh Bhat of BDO India, one of the world's largest tax and accounting firm as the interim resolution professional (IRP). A copy of the pronouncement would be put up by the NCLT later.
Part of the 12 large defaulters identified by Reserve Bank of India (RBI), the loss making ABG Shipyard owes an outstanding debt of over Rs 10,000 crore. The central bank has identified 12 companies as large defaulters based on the criteria of at least Rs 5,000 crore worth of debt exposure, of which 60 per cent has been termed bad by lenders.
So far, companies like Jyoti Structures, Monnet Ispat, Alok Industries, Electrosteel, Amtek Auto, and Bhushan Steel, among others have seen insolvency proceedings under IBC 2016 being admitted by different benches of NCLT.
The pronouncement of the order came at a time when another 20 unsecured creditors have filed an insolvency petition against ABG Shipyard Ltd at Gujarat High Court (HC). Earlier, ABG Shipyard Ltd's counsel had stated that the company had not opposed the insolvency petition filed against in the Gujarat HC.
With the NCLT admitting ICICI Bank's case against ABG Shipyard Ltd, it would now result in the dissolution of ABG Shipyard's Board of Directors on the appointment of the IRP. Under IBC 2016, the IRP — in this case, Sundaresh Bhat, gets 180 days to come up with a workable solution for the company to repay its loans. This timeline can be extended by another 90 days. If the company failed to come up with a solution within the 270 days, a liquidator would be appointed.
The solution plan will have to be approved by the committee of creditors by a 75 per cent majority which is then filed with the NCLT.
ABG Shipyard Ltd had earlier admitted in its July filing on BSE to "deep financial crisis" leading to the company defaulting on repayment of loans under the corporate debt restructuring (CDR) scheme of lenders, with the same being discontinued from March 1, 2017, onwards.
As against a net loss of Rs 1,266.22 crore in the quarter-ended on December 31, 2015, ABG Shipyard had reported a net loss of Rs 822 crore for the said quarter in FY17.
In their previous recovery efforts, the company's lenders had converted their debt into equity, following which ABG Shipyard had sought buyers for the 51 per cent stake of lenders. However, the company failed to attract any buyers.