Vedanta’s Twin Star to Appeal NCLAT Order to Restart Videocon Industries’ Resolution Plan

Vedanta’s holding company Twin Star Technologies, the successful bidder for Videocon Industries and its 12 units, to appeal against appeal court order to relaunch resolution process for consumer durables companies while financial creditors fear that protracted litigation will earn them lower bids. .

The National Company Law Appeals Tribunal on Wednesday ordered the creditors’ committee to restart the resolution process following an appeal from them that Twin Star’s plan is “not feasible.”

Twin Star Technologies is about to argue that the CoC is
Functus Officio – implying that the role of the creditors’ committee ends shortly after the approval of a plan – by the contracting authority. Thus, any appeal of the CoC is not maintainable, indicated people familiar with the matter.

Twin Star will also argue that once a plan is approved by the National Company Law Tribunal, it is binding on all stakeholders in accordance with a landmark Supreme Court ruling in September on Ebix Singapore, which said a plan approved by the NCLT cannot be withdrawn or changed. .

Twin Star did not respond to requests for comment.

The CoC’s appeal, brought after being approved by the court, was primarily motivated by criticism that Videocon and its units were sold at a throwaway price. The recovery for the lenders amounted to 4.15% of the admitted debts.

Some lenders are also worried about restarting the process in the hope of getting an improved offer that could backfire.

“It has been three years since the company was admitted and now it will take another year to complete the process. This will impact the valuation and therefore the recovery. In addition, the cost of CIRP has exceeded Rs 90 crore for Videocon and its 12 units and now a little more money will be spent in the process, which would also be deducted from the clawback, ”a banker told the company. .

“Following the court order to restart the process, lenders will consider appointing a new resolution professional (RP) and seek a new liquidation and fair value report,” said another banker. Abhijit Guha Thakurta, supported by Deloitte India, is currently the PR.

The CoC suggested that the court either rescind its order that approved the plan, or return the resolution plan to it for reconsideration and compliance. In an affidavit, the CoC said “they feel compelled to reconsider their decision in the wider public interest resulting from an unprecedented 95% haircut.”

On June 8, Twin Star’s resolution plan, which was approved at 95.09%, was approved by the NCLT in Mumbai. On July 19, NCLAT provisionally suspended implementation of the plan after it was challenged by dissenting creditors – Bank of Maharashtra and IFCI – over the inequitable distribution of income.

The court judge raised questions about the confidentiality of the liquidation value since the offer made by Twin Star was for Rs 2,962 crore, slightly above the liquidation value of Rs 2,568 crore.

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