Videocon Industries’ Insolvency: Creditors' Committee Seeks A Fresh Start
The creditors' committee of Videocon Industries Ltd. has decided to restart the insolvency process by inviting a fresh round of bids.
The committee on Monday sought permission from National Company Law Appellate Tribunal to once again issue an expression of interest for the Videocon Group entities that have presence in oil and gas, consumer electronics, home appliances, telecom, real estate etc.
The decision is a consequence of the criticism the successful resolution plan has drawn. The resolution plan for 13 group entities had raised eyebrows as financial creditors to Videocon Industries were set to recover only about Rs 2,900 crore compared to Rs 61,000 crore in dues.
95.09% of CoC had approved this plan by Twin Star Technologies Ltd.--a wholly owned subsidiary of U.K.-based Volcan Investments Ltd. Volcan is a parent company of India's listed commodities major Vedanta Ltd. and owns other interests of the Vedanta Resources group founded by Anil Agarwal.
In June, the Mumbai bench of the National Company Law Tribunal had approved Twin Star's plan that entailed a 95% haircut for the financial creditors. The tribunal in its order had also expressed surprise at the fact that Twin Star’s bid was so close to the liquidation value, which is meant to be confidential.
In the order, the NCLT noted that the registered valuers had arrived at a fair value of Rs 4,069 crore for the 13 companies. And a liquidation value of Rs 2,568 crore.
Surprisingly the resolution applicant also valued all the assets and liabilities of all the 13 companies and arrived at almost the same value of the registered valuers.NCLT Order of June
Dissenting financial creditors, including Bank of Maharashtra and IFCI Ltd., opposed the resolution plan in an appeal to the NCLAT, which stayed its implementation.
In an affidavit before NCLAT, the creditors' committee has asked for the case to be remanded back to it. Creditors, majority of whom are public sector banks and financial institutions who are dealing in public money, have to give due weightage and serious consideration to the tribunal's observations.
The decision is to ensure that public money is secured in the best possible manner, as per the affidavit.
I state that the Assenting Financial Creditors have taken all steps strictly in accordance with the Code, having learnt about the observations of the Ld. Adjudicating Authority (NCLT) and upon serious reconsideration, the Assenting Financial Creditors feel duty bound to reconsider their decision in larger public interest.Affidavit by the Committee of Creditors in the NCLAT
The appellate tribunal has sought the response on the affidavit filed by the creditors' committee. The case will next be taken up for hearing on Sept. 27.