Mumbai: The bankruptcy court has allowed the auction of the properties of Western India Shipyard Ltd, a subsidiary of Gujarat-based ABG Shipyard Ltd, one of the 12 large cases referred by the Reserve Bank of India (RBI) for early bankruptcy proceedings.
The Mumbai-bench of the National Company Law Tribunal (NCLT) allowed Western India to auction its assets while disposing of an intervention application of the Mormugao Port Trust (MPT). The trust had intervened to sell the assets even while ICICI Bank Ltd’s insolvency petition against Western India was being heard, citing environmental hazards if the dry dock was not operational.
The tribunal ruled that proceeds from the sale will be deposited in the escrow account of the Bombay high court while ICICI Bank’s case was being heard.
Lenders to Western India have appointed O.M. Kanoongo as the interim resolution professional and the board of the company has been dissolved under the Insolvency and Bankruptcy Code (IBC).
This ruling will pave the way for ABG Shipyard to divest its subsidiary which would help it cut debt. In 2016, ABG had announced that it intended to sell Western India, which it had acquired in 2007, but that didn’t happen owing to differences with its lenders.
Just before the announcement, ICICI Bank had acquired 11 million shares of ABG Shipyard by exercising its right to convert compulsorily convertible preference shares (CCPS), which translated into roughly 11.08% stake in the company.
ICICI Bank did not respond to an email seeking comment.
Email queries to Western India and its parent company ABG Shipyard remained unanswered till the time of going to press. Law firm Cyril Amarchand Mangaldas is representing ICICI Bank in the matter.
Western India has an outstanding debt of around Rs 130 crore and it had reported a loss of Rs 39 crore as on FY 2016, according to stock exchange filings. Lenders to the company had initiated bankruptcy proceedings on 12 December.
Last month, Mint reported that three companies including Reliance Defence and Engineering, Shapoorji Pallonji Group and UK-based Liberty House had shown interest in buying the debt-ridden ABG Shipyard Ltd. ABG owes at least Rs zzz crore to lenders.
On Wednesday, ABG Shipyard closed at Rs 11.47 or 4.84% up on the BSE compared to the Sensex that closed 0.33% down at 34,082.71 points. Western India has been suspended from trading on the bourses.livemint