However, it emphasised that DVI could have carried out its due diligence more effectively to avoid “derailing” of the resolution process.
By not opting for liquidation, NCLT reinforced that “the object of the Insolvency & Bankruptcy Code is not liquidation of the corporate debtor, but resolution of the insolvency situation.” It also said that since in the first round of bidding, 17 expressions of interest (EoIs) had been submitted, and that there is still “value and hope” for Metalyst. NCLT has given the resolution professional (RP) of Metalyst 21 days to invite fresh bids. The committee of creditors (CoC) will take a call within two weeks of that.
US-based investor DVI sought to withdraw its resolution plan for Metalyst that owes `3,841 crore to lenders, after they had voted it as H1. It had alleged that the plan had been “vitiated” by “misrepresentation of fact,” and blamed the RP for not disclosing complete information.
In the order reviewed by ET, the bench observed that the “fault lies on both sides.”