"Amalgam Steel's Acquisition of Topworth Receives NCLT Approval"

The National Company Law Tribunal (NCLT) has given the green light to Amalgam Steel and Power Limited for its acquisition of Topworth Steel and Power Pvt Ltd. This significant development came after Topworth admitted a liability of approximately ₹3,499 crore, with the successful bidder proposing to pay around ₹260 crore.

In an order dated October 11, a division bench presided over by Justice VG Bisht and technical member Prabhat Kumar stated, "The overall feasibility and viability of the plan stands unaltered. 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."

Prior to the NCLT's approval, the lenders of Mumbai-based Topworth Steel and Power had already given their nod to the resolution plan.

Amalgam Steel and Power Limited, a joint venture between Atha & Misra Group, established a special purpose vehicle to acquire Adhunik Alloys & Power Ltd and Orissa Manganese & Minerals Limited through the National Company Law Appellate Tribunal.

Initially, the committee of creditors received 12 resolution plans, but only eight of them were legally compliant. On October 22, 2021, the lenders overwhelmingly approved the plan, with 89.61% voting in favor of Amalgam Steel and Power.

"Operational integrated steel manufacturing plants are always in high demand among bidders when such companies get admitted under the insolvency resolution process," noted Satwinder Singh, founder of Delhi-based law firm Aekom Legal. He cited successful resolutions of companies like Essar Steel, Bhushan Steel, Indian Steel Corporation, and Uttam Galva Steels Ltd as notable examples of such processes.

The average liquidation value of Topworth Steel and Power was ₹238 crore, while the average fair value of the company stood at ₹345 crore. Amalgam Steel and Power's revival plan, proposing ₹260 crore, falls between the liquidation and fair market values, offering a higher payout than liquidation but lower than the fair market value.

Topworth Steel and Power entered corporate insolvency resolution in January 2020 following an application filed by the State Bank of India (SBI), which sought resolution due to the company's default on dues of approximately ₹835 crore. Among the committee of creditors, SBI wields 31.72% of the voting power, with other lenders such as Punjab National Bank, Union Bank of India, and Indian Bank participating. Founded in 2004, Topworth Steel and Power owns a mini integrated steel plant in the Durg district of Chhattisgarh.

This marks the second company within the Topworth Group of Mumbai to face insolvency resolution proceedings. In August, Topworth Urja & Metals Ltd, another affiliate, was admitted after an application filed by one of its lenders, Bank of Baroda.

ET