India's ABG Shipyard Heads for Liquidation
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India's ABG Shipyard Heads for Liquidation

By IndraStra Global News Team

India's ABG Shipyard Heads for Liquidation

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On May 6, 2019, one of India's biggest private-sector naval shipbuilders ABG Shipyard announced that it had entered liquidation following several years of mounting financial losses. After failing to restructure the debt, the company was taken to the insolvency court on the Reserve Bank of India (RBI)'s directions in 2017. It is the second shipbuilder to be sent to liquidation after Bharati Defence and Infrastructure Ltd (BDIL) in January this year.

On 20 February 2019, the committee of creditors (CoC) decided to liquidate the company and authorized the resolution professional Sundaresh Bhat to file an application before the Ahmedabad bench of the National Company Law Tribunal (NCLT), ABG Shipyard informed the stock exchanges. The formal liquidation process was initiated on April 25, 2019, under India's bankruptcy law, the Insolvency and Bankruptcy Code 2016. 

"…pursuant to the 21st meeting of the committee of creditors (CoC) of ABG Shipyard held on February 20, 2019, approval of the members of the CoC was accorded to liquidate the corporate debtor and the resolution professional i.e. Sundaresh Bhat was authorized to file an application before the Hon'ble National Company Law Tribunal (Ahmedabad Bench) seeking liquidation of the corporate debtor," the debt-ridden firm said in a Bombay Stock Exchange (BSE) filing. The shipbuilder owes a total debt of more than ₹16,000 crore/₹170 billion (US$ 2.45 billion)  to 22 banks led by ICICI Bank.

In April 2018, London-based Liberty House led by Indian born businessman Sanjeev Gupta had emerged as the sole bidder in the third round of bidding offering ₹5,200 crore. This offer was on a deferred payment basis stretching over five to 10 years, including an upfront payment of ₹400 crore and issue of debentures. This offer was rejected by the creditors, who had set the liquidation value of the shipyard at ₹2,200 crore. Apart from Liberty House, Shapoorji Pallonji Group and Mahindra Group had evinced interest in ABG Shipyard but did not make any firm offer.

In July 2017, ABG Shipyard discontinued all kind of shipbuilding work - including Indian Navy projects. Incorporated in 1985, ABG Shipyard is the flagship company of ABG Group with interests in shipping and cement sectors. It was one of the three private shipyards in India approved by the Indian Navy and Indian Coast Guard to build various types of naval vessels and has built several vessels for the Indian defense sector.