Nova Scotia withdraws petition against Amtek

Bank of Nova Scotia has backed out of a confrontation with the State Bank of India when it decided to withdraw its petition in the National Company Law Tribunal ( NCLT) initiating bankruptcy proceedings against Amtek Auto.

Secured lenders had sent out a message to unsecured lenders to stay out of legal proceeding in their interest or face delay in recoveries, said two senior bank officials.

Bank of Nova Scotia is an unsecured lender which initiated resolution proceeding under Insolvency and Bankrupcy Code on the company last month.Amtek Auto owned by Arvind Dham, who has 52 per cent stake, owes lenders close to 14,000 crore. "The move signals that secured lenders want to have complete control over the recovery proceedings," said a senior bank official.

Lenders approached NCLT in Chandigarh early this week and suggested consulting firm EY as their interim resolution officer.

The Chandigarh NCLT will hear the case on July 20. A consortium of lenders, led by Corporation Bank, has approached NCLT to initiate insolvency proceedings on the company following directions by the banking regulator. Amtek Auto is among the 12 companies RBI identified for speedy resolution under the bankruptcy code.

This is the second instance where secured lenders have confronted unsecured lenders. Earlier, SBI which received a mandate from 89 per cent of lenders, decided to approach NCLT against Essar Steel even as unsecured creditor, Standard Chartered approached NCLT against the steel major. Both banks had different interim resolution professionals (IRP) for Essar Steel wherein SBI suggested Alvarez & Marsal while Standard Chartered wanted EY.

Soon after RBI identified Amtek Auto for IBC, John Flintham resigned as vice chairman but within 24 hours he was appointed president (operations).