“The overall feasibility and viability of the plan stands unaltered,” the division bench presided over by Justice VG Bisht and technical member Prabhat Kumar said in its order of October 11. “The resolution plan is not in contravention of any of the provisions of the code (Insolvency and Bankruptcy Code) and is in accordance with law. The same needs to be approved.”
Before the National Company Law Tribunal’s nod to the acquisition, the lenders of Mumbai-based Topworth Steel and Power had approved the resolution plan.
Amalgam Steel and Power Limited, as per its website, is a joint venture between Atha & Misra Group. A special purpose vehicle was incorporated to acquire Adhunik Alloys & Power Ltd and Orrisa Manganese & Minerals Limited through the National Company Law Appellate Tribunal.
Originally, the committee of creditors had received 12 resolution plans, but only eight of them were legally compliant. On October 22, 2021, the lenders approved the plan with 89.61% voting in favour of Amalgam Steel and Power.
“Operational integrated steel manufacturing plants are always in high demand among bidders when such companies get admitted under insolvency resolution process,” said Satwinder Singh, founder of Delhi-based law firm Aekom Legal. “Successful resolution of companies such as Essar Steel, Bhushan Steel, Indian Steel Corporation and Uttam Galva Steels Ltd are prominent examples of such successful resolution process.”
The average liquidation value of the Topworth Steel and Power was ₹238 crore while the average fair value of the company stood at ₹345 crore. The revival plan submitted by Amalgam Steel and Power at ₹260 crore, proposes to pay higher than liquidation value but much lower than the fair market value. In January 2020, the company was admitted under the corporate insolvency resolution process following an application filed by the State Bank of India (SBI). The lender had approached the tribunal after the company defaulted on its dues of about ₹ 835 crore. Apart from the SBI, which controls 31.72% of voting power in the committee of creditors, other lenders, include Punjab National Bank, Union Bank of India and Indian Bank. Founded in 2004, the company owns a mini integrated steel plant in Durg district of Chhattisgarh. This is the second company of Mumbai-based Topworth Group facing insolvency resolution proceedings. In August, another affiliate company, Topworth Urja & Metals Ltd, was also admitted following an application filed by one of its lenders, Bank of Baroda.