NCLAT junks Videocon sale, calls for fresh bids

New Delhi, Jan. 5: 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 (NCLAT) asked creditors to initiate the 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 had in June last year consent to Twin Star Technologies' takeover offer.

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.

A two-member bench of Jarat Kumar Jain and Ashok Kumar Mishra said the approval to the takeover plan was "not in accordance with Section 31 of the Code" and set aside "the approval of Resolution Plan by the Committee of Creditors (CoC) as well as Adjudicating Authority (NCLT)".

It remitted the matter back to CoC 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."