ABG Shipyard heading for liquidation

Mumbai: Banks, led by State Bank of India, are set to reject the offer made by Liberty House for ABG Shipyard on grounds that there’s no upfront payment of cash, and that the bid itself is too low, said two senior officials who did not want to be identified.

London-based metals house Liberty House is the sole bidder of ABG Shipyard which is facing Rs 18,245 crore claims from financial creditors.

“The offer from Liberty is Rs 5,600 crore which would be payable only after the fifth year, and there would be no interest payment in the interim period,” said one of the person quoted above. “This is not acceptable to us,” he said.

According to the proposal, the amount will be paid over a period of 10 years and the first installment will be paid at the end of the fifth year, said people mentioned above. As per current norms, at least 75% of the lenders in terms of value of the loan should give their consent for the resolution plan to be approved by the lenders.

Several large banks appear to be averse to any proposal where the cash payment is not upfront. In all likelihood, ABG Shipyard would be liquidated.


ABG Shipyard, the debt-laden shipbuilder, is among the first list of 12 companies that the Reserve Bank of India has directed banks to refer to the bankruptcy court immediately. Alok Industries is the only other company in the first list so far where the bidder –– Reliance Industries and JM Financial ARC –– failed to receive 75% votes from lenders.

The 270-day deadline before which lenders have decided on the fate of the bankrupt company ends on April 30.

Liberty House had made several attempts to acquire ABG Shipyard in the past, but its bids were rejected on three occasions.

In the first round held in February, the binding bid from Liberty House was rejected on grounds that the offer was too low for the lenders to be convinced. In the second round, the company missed the deadline for submission of bids.

And in the third round, the company’s default to Exim Bank made it ineligible to bid for bankrupt companies under the Insolvency and Bankruptcy Code.

Under Section 29A of the IBC, non-payment of dues disqualifies companies from bidding. Liberty House claims that it has repaid its dues to Exim Bank and is set to challenge the decision taken by the resolution professional to disqualify them.