The National Company Law Tribunal (NCLT) has observed that the bidder is “paying almost nothing” for the 13 Videocon companies while approving the resolution plan of Anil Agarwal’s Twin Star Technologies to acquire them.

Creditors will be taking nearly 96% haircut on their loans to the Videocon group of companies which have presence in oil and gas, consumer electronics, home appliances, telecom and real estate.

Twin Star Technologies’ offer of Rs 2,962.02 crore for these companies, against admitted claims of Rs 64,838.63 crore, is close to their liquidation value. Registered valuers have valued the assets of the 13 companies at a fair value of Rs 4,069 crore and at a liquidation value of Rs 2,568 crore.

“Surprisingly, the resolution applicant also valued all the assets and liabilities of all the 13 companies and arrived at almost the same value as the registered valuers,” the Mumbai bench of the NCLT noted in its order.

The committee of creditors (CoC) are informed about the liquidation value and fair market value only at the time of finalising the resolution plan.

“Even if the confidentiality clause is in existence, in view of the facts and circumstances as discussed above, a doubt arises upon the confidentiality clause being in real-time use. Therefore, we request the Insolvency and Bankruptcy Board of India to examine this issue in depth to ensure that the confidentiality clause is followed scrupulously, without any compromise in letter and spirit by all the concerned parties and entities connected in the corporate insolvency resolution process,” the NCLT observed.

Twin Star’s offer of Rs 2,962.02 crore is only 4.15% of the total outstanding claim and a total haircut of 95.85% to all the creditors. The resolution plan is giving operational creditors a 99.28% haircut, which the NCLT sarcastically hinted to be a “Haircut or Tonsure, Total Shave”.

“The successful resolution applicant is paying almost nothing and 99.28% haircut is provided for operational creditors,” the NCLT said in its order.

The tribunal also requested the CoC and Twin Star to increase the payout amount to operational creditors as they are getting only 0.72% of their admitted claim amount.

Many of the operational creditors are also micro, small and medium enterprises (MSMEs) and in the near future many of these operational creditors may have to face insolvency proceedings, which may be inevitable,” NCLT said in its order passed on 9 June.

The NCLT order also said the shares of Videocon Industries Ltd and Value Industries Ltd, originally Videocon Appliances Ltd, will be delisted from stock exchanges following the acquisition by Twin Star. The process has to be completed within 44 days from the effective date of the plan.