A bankruptcy appeals court has scrapped billionaire Anil Agarwal-led Twin Star Technologies' winning bid to take over Videocon Industries Ltd on a plea by some creditors that the money offered imposed a steep Rs 62,000 crore haircut upon banks.
The National Company Law Appellate Tribunal has asked creditors to initiate a fresh sale of Videocon, a consumer durables company manufacturing products ranging from air-conditioners to washing machines, for recovery of their unpaid Rs 64,637.6 crore.
While a majority of lenders had previously accepted Twin Star Technologies' Rs 2,962.02 crore offer, Bank of Maharashtra (BoM) and IFCI Ltd dissented, saying the amount offered was close to the liquidation value of the bankrupt firm and that they cannot be paid less than the liquidation value. Following the nod of the Committee of Creditors of Videocon, the Mumbai bench of the National Company
Law Tribunal (bankruptcy court) had in June last year consented to Twin Star Technologies' takeover offer (called Resolution Plan under the bankruptcy law). That order was challenged by BoM and IFCI before NCLAT, which on Wednesday set aside the NCLT order saying provision of the Insolvency and Bankruptcy Code (IBC) had not been complied with.
It remitted the matter back to Committee of Creditors for completion of the process in accordance with the provisions of the code. This essentially means the CoC will now seek fresh bids for Videocon, unless the NCLAT order is challenged in the higher court and is upturned.
"We learnt about the order and it will further delay Videocon's resolution," Gopal Jain, advocate for Twin Star, said commenting on behalf of the company on the order. "We are awaiting the written order and will, thereafter take appropriate action."
BoM, which has 1.97 per cent voting rights in the CoC, and IFCI Ltd with 1.03 per cent voting share, had also objected to the major part of the payment by Agarwal's firm being made through non-convertible debentures instead of cash.
Twin Star was to pay Rs 500 crore within 90 days and the rest as non-convertible debentures over a period of time. Videocon's shares were to be delisted as part of the plan. Videocon was among the first 12 companies pushed into bankruptcy following a 2017 directive of the Reserve Bank of India (RBI) to auction firms that had unpaid dues.
