April 1, 2023

nclt: NCLAT sets aside Videocon’s sale to Vedanta co Twinstar – Times of India

MUMBAI: The National Company Law Appellate Tribunal (NCLAT) has set aside an order by the Mumbai bench of the National Company Law Tribunal (NCLT) approving the resolution plan for Videocon by Vedanta’s Twin Star Technologies. The tribunal has asked the committee of creditors for fresh bids.
The appellate tribunal issued the order noting that the transaction was not in compliance with the Insolvency and Bankruptcy Code (IBC). The order was in an appeal last year filed by the Bank of Maharashtra, Sidbi and IFCI that were dissenting creditors. The resolution plan had turned controversial and drew sharp comments from the NCLT as the bid was close to the liquidation value and involved a 95% write-off. The NCLT had approved the order in June 2021 noted that the successful bidder was “paying almost nothing” and hinted that there appeared to be a breach of the confidentiality clause.
A banker TOI spoke to said that the Vedanta resolution plan was as good as dead as lenders themselves had sought a rebid. SBI, the largest financial creditor, had in September 2021 approached the appellate tribunal seeking a rebid. SBI, which has around 18% vote share, had cited the observations made in the NCLT order over the hair-cut suffered by various classes of creditors.

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In July 2021, the NCLAT had stayed the sale of the group companies to Twinstar. The dissenting creditors had objected to the deal pointing out that lenders were getting less than 5% of the admitted claims and even this meagre amount was not being paid upfront but largely in the form of debentures with little cash coming in.
Even as the Twinstar bid was stayed by the NCLAT, the corporate affairs ministry had moved in and filed a petition in NCLT to attach the assets of Videocon promoters to increase recovery in the case. In August 2021, the NCLT issued an order to freeze and attach assets and properties of Videocon promoters. The tribunal also directed the Central Board of Direct Taxes (CBDT) to disclose information about all assets of the Videocon promoters to freeze and restrain such assets. It also asked banks to provide details of their bank and depository accounts and lockers.
Metal magnate Anil Agarwal’s Vedanta group has big plans for the electronics segments – where most of the Indian big names have been wiped out of business. The company had earlier announced plans to set up a flat-screen manufacturing facility in India through Twinstar Display Technologies. More recently, the company has talked about investing in a chip fabrication facility in the country.

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