Billionaire Anil Agarwal is yet to seal the Videocon deal at a throwaway price as the National Company Law Appellate Tribunal (NCLAT) on Monday stayed his Twin Star Technologies’ Rs 2,962.02 crore-takeover bid over the pleas filed by two dissenting creditors who have been unhappy with the deep haircut they had to settle for through the resolution.
A two-judge bench headed by officiating NCLAT chairman Ashok Iqbal Singh Cheema stayed the order passed by the National Company Law Tribunal (NCLT) on 9 June. The bench directed to maintain “status quo ante” as before passing of the order, till the next date of hearing. Adjourning the matter to 7 September, the order asked the company to continue being managed by the resolution professional till then.
Bank of Maharashtra and IFCI Ltd had filed a plea contending that as per the law, they could not have been paid less than the liquidation value. They also opposed the resolution plan which allowed a major part of the payment being made in the form of non-convertible debentures (NCDs).
Another issue raised by the petitioners was the possible breach of the confidentiality of the liquidation value during the insolvency process of Videocon Industries.
In its 9 June order, the NCLT had observed that the liquidation value of the 13 Videocon group companies and resolution plan value were surprisingly very close, the petitioners submitted. Twin Star Technologies had offered to pay Rs 2,962 crore for all 13 companies against the admitted claims of Rs 64,838 crore, implying a total haircut of 95.85% to all the creditors.
“It is argued that it is matter of concern that the corporate debtors in the consolidated proceedings had cash of Rs 200 crore and the SRA would bring in just 262 crore and from that also first payment of Rs 200 crore will be brought in 25 months. Beyond Rs 262 crore, the rest was being brought in only by way of NCDs to be paid in six years," NCLAT said in its order on Monday.
While approving the resolution plan of Twin Technologies, the NCLT in its order dated 15 June had observed that the bidder is “paying almost nothing” for the 13 Videocon companies which have presence in oil and gas, consumer electronics, home appliances, telecom and real estate.
“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 had 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.
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.
