India Court Halts Billionaire Agarwal’s Plan to Buy Videocon

Anil Agarwal, billionaire and owner of Vedanta Resources Plc. (Photographer: Waldo Swiegers/Bloomberg)

India Court Halts Billionaire Agarwal’s Plan to Buy Videocon

An appeals court in India halted billionaire Anil Agarwal’s plan to take over Videocon Industries Ltd., after some creditors challenged the steep haircut imposed upon banks in the deal.

The National Company Law Appellate Tribunal on Monday stayed a bankruptcy court’s verdict that approved the sale of Videocon Industries to Twin Star Technologies -- part of Agarwal’s Vedanta Group -- on an appeal by Bank of Maharashtra, said Chaitanya B. Nikte, the bank’s lawyer. IFCI Ltd. has also appealed the approval, according to updates on the appeals court’s website.

India Court Halts Billionaire Agarwal’s Plan to Buy Videocon

“Bank of Maharashtra is a dissenting creditor and one of the lead appellants objecting the approval with steep haircut,” the lender’s lawyer Chaitanya B. Nikte said.

Agarwal’s firm proposed to pay around 29.6 billion rupees ($395 million) to acquire Videocon Industries, which owed around $8.6 billion to creditors. The amount Agarwal’s firm will pay is “surprisingly close” to the liquidation value of the bankrupt firm and the dissenting lenders cannot be paid less than the liquidation value, lawyers for Bank of Maharashtra and IDFC said during the hearing, according to the order on the court’s website.

Lawyers for Bank of Maharashtra and IFCI also objected to the major part of the payment by Agarwal’s firm being made through non-convertible debentures instead of cash.

The court stayed the deal “considering the exceptional facts” of the case and directed the companies to maintain status as before the bankruptcy court approved the take over, according to the order.

The NCLAT will hear the case next on September 7, Nikte said. Emails to spokespersons of Vedanta and the lead lender to Videocon, State Bank of India, remained unanswered. Lawyers for Twin Star and the bankruptcy administrator defended the approval, saying the plan is in compliance with the country’s insolvency laws, according to the court order.

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