The Insolvency and Bankruptcy Code is being abused by unscrupulous business players. The NCLT resolutions of four companies of the Amtek group which owed admitted claims of Rs 24,945 crore to financial creditors shows this fact. The modus operandi involves several steps: bid sabotage, default, drubbing down the price discovery through sudden withdrawal by the top bidder only to be replaced by bids below liquidation value. All this leads to creditors taking huge haircuts. And yet such practices are encouraged repeatedly. Indeed, in the case of the Amtek group, this has become a trend with the duo of Liberty House Group PTE Ltd (LHG), promoted by Sanjeev Gupta, headquartered in London and Deccan Value Investors LP (DVI).

Four companies of Amtek Group are: Amtek Auto Ltd, Castex Technologies Ltd, Metalyst Forgings Ltd, and ARGL Ltd.

In the case of Amtek Auto Ltd, LHG after having been declared as the H1 bidder at Rs 4,025 crore, withdrew. Even the H2 bidder, DVI, backed out. Finally, against an admitted claims of financial creditors of Rs 12,605 crore, DVI agreed to pay only Rs 1,500 crore (NPV), much lower than even the liquidation value of Rs 4,119 crore.

In this case of Castex Technologies Ltd also, LHG was declared as the H1 bidder, but it did not submit the performance bank guarantee. In the re-bid, DVI submitted its plan and was declared as the H1 bidder. How much it gained through this trick in this case, is not known.

For Metalyst Forgings Ltd, DVI was declared as the H1 bidder. Later, DVI did not submit the performance bank guarantee.

In the case of AGRL Ltd, LHG was the only party who gave the resolution plan. But it backed out and did not submit the performance bank guarantee. As a result, the price for ARGL was known so that someone else can step in to takeover debt laden companies at throw away prices.