The ABG Shipyard, once India's largest private ship company, recently announced the official launch of the liquidation process under the bankruptcy law.
Although the British Metal Group Liberty House, the sole bidder, claimed that its offer to the ABG shipyard exceeded the liquidation value, the Indian court still decided to liquidate the ABG shipyard. The Indian National Corporation Legal Court (NCLT) ordered the liquidation of the ABG shipyard on April 25, and Sundaresh Bhatt, a partner of the Dutch consulting firm BDO, has been designated by the court as the liquidator of the ABG shipyard.
According to people familiar with the matter, Liberty House had previously promised to pay about 4 billion rupees (about $57 million) in advance to the debt bank of ABG Shipyard, and the remaining amount will be paid within 5 to 10 years.
According to the valuation of the independent valuer, the clearing value of the ABG shipyard is slightly higher than 20 billion rupees (about 287 million US dollars). ABG Shipyard arrears creditor banks about 160 billion rupees (about 2.297 billion US dollars).
Earlier this year, a creditor committee (CoC) led by the ICICI Bank of India had passed a resolution to support the liquidation plan. The creditor committee of ABG Shipyard contains 22 banks, of which the largest amount is owed by the Industrial Credit Investment Bank of India.
In the first two rounds of the ABG shipyard, Liberty House was the only bidder. Last year, Liberty House proposed using ABG's existing shipbuilding facilities to build a Steel plant for recycling metal scrap. At the time, Liberty House offered Rs 520 crore ($ 747 million) in hopes of acquiring the ABG shipyard. However, at the end of last year, the creditor bank rejected the solution submitted by Liberty House.
Following the bankruptcy and liquidation of Bharati Defence and Infrastructure in January this year, ABG Shipyard became the second bankrupt shipyard in India this year. Both shipyards have licenses to build warships for the Indian Navy. Similar to the Bharati shipyard, the closure of the ABG shipyard will also result in the loss of hundreds of local workers.
At the same time, the Indian government is seeking to revitalize the Indian shipbuilding industry as part of its “Make in India†initiative. In February of this year, the Indian Ministry of Shipping comprehensively reformed a cargo support policy for local Indian shipowners. When transporting import and export goods or providing other services to state-owned enterprises (such as dredging and offshore oil exploration support), priority is given to building ships in India. .
It is understood that ABG Shipyard was established in 1985. It is one of the three Indian private shipyards approved by the Indian Navy to build various types of ships. It has built some ships for the Indian defense department. Although ABG Shipyard has the infrastructure and the potential to book new orders from local customers, ABG Shipyard has not been able to attract suitable buyers due to overcapacity in the global shipbuilding industry.
ABG Shipyard began to suffer from operational difficulties in 2014. Negative factors such as falling orders, withdrawals, rising shipbuilding costs and delays in equipment expansion have brought a heavy blow to ABG Shipyard. In 2015, ABG Shipyard delivered the last ship in the hand-held order.
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