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  • Successful resolution seeker Vedanta’s arm is looking for time to respond to CoC’s request.
  • Videocon bankruptcy: NCLAT to hear CoC plea alleging low payment on September 27

New Delhi: In another setback for Vedanta’s plans to acquire debt-ridden Videocon Industries, lenders who agreed to Twin Star Technologies (TST) ‘s resolution plan want to reconsider citing up to 95% haircuts. The National Company Law Appellate Tribunal (NCLAT) has requested a response from Vedanta’s subsidiary, TST, at the request of a Creditors Committee (CoC) led by the Bank of Maharashtra, which wants a new round of appeals from offers for the resolution plan.

NCLAT will review CoC’s request alleging low payment on September 27, as TST has requested time to respond. On July 19, NCLAT suspended the order of the National Company Law Tribunal (NCLT) in Mumbai which authorized the Rs. 3,000 crore bid for Videocon in June of this year. At the time, NCLAT published notices on appeals from the Bank of Maharashtra and IFCI, which called “tonsure” steep haircuts of up to 95%.

The resolution professional was asked to continue to manage debtor companies in accordance with the provisions of the IBC until further notice.

On August 13, the Supreme Court refused to lift the stay, dismissing TST’s appeal against the NCLAT order. TST’s arguments indicating the CoC’s approval of its resolution plan and allegations of reversal by the lenders had failed to resolve in the highest court.

Lenders’ appeals against the NCLT order called the nearly 90% to 95% haircut approved in the resolution plan as a “tonsure” because the plan called for a meager amount of Rs. 2,900 crore for admitting liability of Rs. 65,000 crore and the waiver itself was Rs. 62,100 crore where public money had been lost.

Arguing that financial creditors were only paid for 5-10% of the total amount of contributions, the appeals argued that no upfront payment had been made even to meet basic legal obligations, saying the obligations non-convertible bonds (NCDs) had been adopted as a method of repaying debt to lenders.

The appeals raised concerns that the debtor companies in the consolidated proceeding had cash of Rs. 200 crore, claiming that the successful resolution applicant would only earn 262 crore and from that also the first payment of Rs. 200 crores will be provided in 25 months. The appeals argued that beyond Rs. 262 crore, the remainder of the amount was brought in only through MNT, to be paid over six years.

The resolution process has slowed down further due to multiple appeals against the NCLT order. NCLAT has also requested responses from the Center and the Videocon administrator to respond to appeals by former promoter Venugopal Dhoot against the NCLT winking at the resolution plan and its injunction to seize its assets.

NCLAT is due to hear Dhoot’s appeal against the resolution plan on November 22, and his appeal against the seizure of assets on September 22. NCLT had ordered the seizure of the assets of former Videocon promoters, including Venugopal Dhoot, an order that will affect the resolution of the bankrupt company until it is revoked.

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