IFCI reaches NCLT against Videocon debt resolution

Lenders call for separate bids for oil assets currently valued at ~15,000 crore

Delhi-based lender IFCI Ltd has moved the National Company Law Tribunal (NCLT) opposing other lenders’ plans to sell Videocon Industries’ oil assets and consumer durable business separately.

IFCI, one of the lenders of Videocon Industries, argued that while the debt of oil assets has been treated as Videocon Industries’ consolidated debt, the value of oil assets has not been included in VIL’S resolution, thereby impacting its recovery. IFCI, Sidbi and Bank of Maharashtra, holding 4 per cent of voting shares in the Committee of Creditors, have also filed an appeal in the NCLAT against the VIL’S debt resolution saying that recovery is miniscule and it makes no sense to accept a 96 per cent haircut.

The NCLT Mumbai had earlier ordered that VIL and Videocon Oil Ventures’s oil assets should be a part of the consolidated resolution plan of VIL. In fact, when the information memorandum calling for VIL’S bids were issued, it did not have any mention of VIL’S oil assets, impacting its valuation. An appeal against the NCLT order is pending in the NCLAT.

lenders have called for separate bids for Videocon’s oil assets which are currently valued at ~15,000 crore and 11 companies have expressed their interest to acquire it.

Vedanta’s holding firm, Twinstar, has already won the mandate to buy Videocon’s Indian assets for ~3,000 crore and has offered a 6 per cent stake in VIL to the lenders.

VIL was referred to the NCLT in 2018 for defaulting on loans worth ~62,000 crore. The loans included corporate guarantees by VIL, the flagship company, under the obligor-co-obligor structure for the oil and gas business, to the tune of ~20,000 crore. Once the company was sent to the NCLT, Indian banks filed their claims in respect of the guarantee while, at the same time, running the corporate insolvency resolution process of VOVL (formerly Videocon Oil Ventures), separately, which held all the oil and gas assets.

At the NCLT, the bankers filed claims against both the borrower (VOVL) and the guarantor (VIL) simultaneously. While the VIL standalone debt worth ~30,000 crore was resolved with Twinstar winning the race for the Indian assets, the rest of VIL’S debt will be completed once the lenders select the highest bidder for the Brazilian assets.

The promoters of VIL — the Dhoot family — had submitted an application to the committee of creditors under Section 12A of the Insolvency and Bankruptcy Code last year, but failed to get the mandatory 90 per cent votes from the lenders. The lenders had cleared Twinstar’s offer in December last year.

Videocon Group fell into a financial crisis after the Supreme Court cancelled its wireless telephony licence in 2012 and VIL’S investment in the telecommunications (telecom) arm turned bad. At the same time, the loans taken by the telecom arm from Indian banks had also become non-performing assets.