The lenders of Amtek Auto, led by Union Bank of India, have moved the Supreme Court against Deccan Value Investors for exercising ‘force majeure’ clause in its resolution plan.
The lenders have charged contempt of court on DVI, as the Supreme Court has already rejected a petition by it to review the resolution plan in light of the Covid pandemic.
Reacting to the development, DVI said it submitted the resolution plan for Amtek Auto in Januaryin good faith and with a detailed strategy to revive Amtek’s fortunes.
In March, Covid-19 triggered an immediate and accelerating deterioration in industrial activity across sectors. The impact was severe on the auto sector and Amtek’s financial position worsened quickly, rendering DVI’s commercial assumptions for the company redundant, it added.
DVI’s resolution plan states that any material impact on Amtek’s performance due to a pandemic would allow DVI to exercise force majeure.
In addition, DVI built into its resolution plan and contract certain condition precedents without which the deal could not proceed. One such condition related to an ongoing dispute between the creditors and leaseholders of a key plot of land on which Amtek’s manufacturing facilities stand. All of these matters will now be adjudicated by the courts, it said.
DVI is confident of its position and looks forward to a final outcome that upholds the sanctity of contract under the IBC, it added.
As against the overall default of ₹12,500 crore, the lenders will recover ₹2,700 crore from the three-year-old insolvency proceedings in Amtek Auto. Of the committed sum, DVI will pay just ₹500 crore upfront, while the remaining amount will be covered by selling the non-core assets of the company.