New Delhi: A bankruptcy appeals court on Wednesday quashed the winning bid of billionaire Anil Agarwal-led Twin Star Technologies. Videocon Industries Limited On a plea by some creditors that the money offered led to a massive deduction of Rs 62,000 crore on banks.
National Company Law Appellate Tribunal (NCLAT) asked creditors to start fresh sales of Videocon, a consumer durables company that manufactures products ranging from air-conditioners to washing machines, to recover its dues of Rs 64,637.6 crore.
While most of the lenders had earlier accepted the Rs 2,962.02 crore offer of Twin Star Technologies, Bank of Maharashtra (BoM) and IFCI Ltd disagreed, saying the amount given was close to the liquidation value of the insolvent firm and they should Less cannot be paid. liquidation value.
On June 9 last year, the Mumbai bench of the National Company Law Tribunal (bankruptcy court) agreed to the acquisition proposal (called resolution plan under the bankruptcy law) of Twin Star Technologies, following the approval of the committee of creditors of Videocon.
That order was challenged by the BoM and IFCI before the NCLAT, which on Wednesday quashed the NCLT order holding that the provisions of the Insolvency and Bankruptcy Code (IBC) were not complied with.
videocon promoter Venugopal Dhoot Questioning the conduct of the lenders, the NCLT order was also challenged.
A two-member NCLAT bench comprising Jarat Kumar Jain and Ashok Kumar Mishra said that the approval of the takeover plan was “not in accordance with Section 31 of the Code” and “set aside the approval of the resolution plan by the Committee of Creditors (CoC). Also the adjudicating authority” (NCLT)”.
The NCLAT also stated that prior approval of Competition Commission of India (CCI) is required for submission of resolution plan under Section 31(4) of IBC, which was not obtained. Anil Agarwalfirm of.
It has referred the matter back to the CoC to complete the process as per the provisions of the Code.
This essentially means that the CoC will now seek fresh bids for Videocon unless the NCLAT order is challenged and reversed in the High Court.
Twin Star’s counsel Gopal Jain, commenting on the company’s behalf on the order, said, “We have come to know about the order and this will further delay the resolution of Videocon.” “We are waiting for the written order and will take appropriate action after that.”
BoM, which has 1.97 per cent voting rights in the CoC, and IFCI Ltd has 1.03 per cent voting share, also held that the bulk of the payments by Agarwal’s firm were made through non-convertible debentures (NCDs) instead of cash. objection was raised.
Twin Star was to pay Rs 500 crore within 90 days and the balance in the form of non-convertible debentures over a period of time. Videocon’s shares were to be delisted under the plan.
Videocon was among the first 12 companies pushed into bankruptcy following a 2017 directive from the Reserve Bank of India (RBI) that had firms auctioning off dues.
The NCLAT order said that the creditors made total claims of Rs 72,078.5 crore on Videocon, out of which claims worth Rs 64,637.6 crore were verified and admitted for the purpose of insolvency.
“It was stated that the scheme provides for a nominal amount of Rs.2962.02 crore against the sanctioned liability of about Rs.65,000 crore. The said exemption is about Rs.62,000 crore of sanctioned claims and Rs.69,000 crore of total claims thereby causing it to lose public money. , haircut is more than about 95 percent.
“Even the claims of financial creditors have been settled below 5%, while that of OCs (Operational Creditors) is barely 0.72%,” it said.
The appellate tribunal did not agree with the NCLT, which had cited the Supreme Court’s decision while approving the bid and said that the professional knowledge of the CoC cannot be questioned.
The NCLAT in its 213-page order said, “CoCs are the best judges for making, making and taking prudent business decisions for business, but they are also given a test of discretion to ensure fairness and transparency.”
The Appellate Tribunal held that both the NCLT and the NCLAT have the power to send back a resolution plan to the lenders for reconsideration.
In this case, the lenders had approached the NCLAT for making fresh bids for 13 group companies of Videocon.
The NCLAT, concurring with the banks, said that if the resolution plan requires a major cut, which will be borne by the exchequer, it is in the expediency that the proposal is sent back to the CoC.
Further, it said that the resolution plan “provides payment to the dissatisfied financial creditors by way of NCDs and equity as permissible as per the Code.”
In the 19th meeting of the CoC held on November 11, 2020, the lenders were apprised of the acknowledgment copy of the applications filed with the CCI, seeking its approval for the resolution plan.
“We could not ascertain whether such approval has been received from CCI even in the 20th and 21st CoC meeting, whereas the resolution plan was approved by the CoC in the 19th CoC meeting. Therefore, it is very clear that the former The approval has not been obtained by the CCI in accordance with the provision of section 31(4) of the Code,” the NCLAT said.
NCLT had consolidated the insolvency process for 13 group companies on August 8, 2019 – videocon Industries, Value Industries, Applicomp, CE India, Century Appliances, Electroworld Digital Solutions, Evans Fraser & Company, Millennium Appliances, PE Electronics, Sky Appliances, Techno Electronics, Techno Kart, Value Industries and Videocon Telecom
Insolvency proceedings for two other Videocon companies – KIL Ltd. and Trend Electronics – were conducted independently.
National Company Law Appellate Tribunal (NCLAT) asked creditors to start fresh sales of Videocon, a consumer durables company that manufactures products ranging from air-conditioners to washing machines, to recover its dues of Rs 64,637.6 crore.
While most of the lenders had earlier accepted the Rs 2,962.02 crore offer of Twin Star Technologies, Bank of Maharashtra (BoM) and IFCI Ltd disagreed, saying the amount given was close to the liquidation value of the insolvent firm and they should Less cannot be paid. liquidation value.
On June 9 last year, the Mumbai bench of the National Company Law Tribunal (bankruptcy court) agreed to the acquisition proposal (called resolution plan under the bankruptcy law) of Twin Star Technologies, following the approval of the committee of creditors of Videocon.
That order was challenged by the BoM and IFCI before the NCLAT, which on Wednesday quashed the NCLT order holding that the provisions of the Insolvency and Bankruptcy Code (IBC) were not complied with.
videocon promoter Venugopal Dhoot Questioning the conduct of the lenders, the NCLT order was also challenged.
A two-member NCLAT bench comprising Jarat Kumar Jain and Ashok Kumar Mishra said that the approval of the takeover plan was “not in accordance with Section 31 of the Code” and “set aside the approval of the resolution plan by the Committee of Creditors (CoC). Also the adjudicating authority” (NCLT)”.
The NCLAT also stated that prior approval of Competition Commission of India (CCI) is required for submission of resolution plan under Section 31(4) of IBC, which was not obtained. Anil Agarwalfirm of.
It has referred the matter back to the CoC to complete the process as per the provisions of the Code.
This essentially means that the CoC will now seek fresh bids for Videocon unless the NCLAT order is challenged and reversed in the High Court.
Twin Star’s counsel Gopal Jain, commenting on the company’s behalf on the order, said, “We have come to know about the order and this will further delay the resolution of Videocon.” “We are waiting for the written order and will take appropriate action after that.”
BoM, which has 1.97 per cent voting rights in the CoC, and IFCI Ltd has 1.03 per cent voting share, also held that the bulk of the payments by Agarwal’s firm were made through non-convertible debentures (NCDs) instead of cash. objection was raised.
Twin Star was to pay Rs 500 crore within 90 days and the balance in the form of non-convertible debentures over a period of time. Videocon’s shares were to be delisted under the plan.
Videocon was among the first 12 companies pushed into bankruptcy following a 2017 directive from the Reserve Bank of India (RBI) that had firms auctioning off dues.
The NCLAT order said that the creditors made total claims of Rs 72,078.5 crore on Videocon, out of which claims worth Rs 64,637.6 crore were verified and admitted for the purpose of insolvency.
“It was stated that the scheme provides for a nominal amount of Rs.2962.02 crore against the sanctioned liability of about Rs.65,000 crore. The said exemption is about Rs.62,000 crore of sanctioned claims and Rs.69,000 crore of total claims thereby causing it to lose public money. , haircut is more than about 95 percent.
“Even the claims of financial creditors have been settled below 5%, while that of OCs (Operational Creditors) is barely 0.72%,” it said.
The appellate tribunal did not agree with the NCLT, which had cited the Supreme Court’s decision while approving the bid and said that the professional knowledge of the CoC cannot be questioned.
The NCLAT in its 213-page order said, “CoCs are the best judges for making, making and taking prudent business decisions for business, but they are also given a test of discretion to ensure fairness and transparency.”
The Appellate Tribunal held that both the NCLT and the NCLAT have the power to send back a resolution plan to the lenders for reconsideration.
In this case, the lenders had approached the NCLAT for making fresh bids for 13 group companies of Videocon.
The NCLAT, concurring with the banks, said that if the resolution plan requires a major cut, which will be borne by the exchequer, it is in the expediency that the proposal is sent back to the CoC.
Further, it said that the resolution plan “provides payment to the dissatisfied financial creditors by way of NCDs and equity as permissible as per the Code.”
In the 19th meeting of the CoC held on November 11, 2020, the lenders were apprised of the acknowledgment copy of the applications filed with the CCI, seeking its approval for the resolution plan.
“We could not ascertain whether such approval has been received from CCI even in the 20th and 21st CoC meeting, whereas the resolution plan was approved by the CoC in the 19th CoC meeting. Therefore, it is very clear that the former The approval has not been obtained by the CCI in accordance with the provision of section 31(4) of the Code,” the NCLAT said.
NCLT had consolidated the insolvency process for 13 group companies on August 8, 2019 – videocon Industries, Value Industries, Applicomp, CE India, Century Appliances, Electroworld Digital Solutions, Evans Fraser & Company, Millennium Appliances, PE Electronics, Sky Appliances, Techno Electronics, Techno Kart, Value Industries and Videocon Telecom
Insolvency proceedings for two other Videocon companies – KIL Ltd. and Trend Electronics – were conducted independently.
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