NCLAT bans Twin Star's Videocon bid

NCLAT bans Twin Star's Videocon bid

A billionaire Anil Agarwal-owned Twin Star Technologies’ decide to buy Videocon Industries Ltd has received a setback after the National Company Law Appellate Tribunal (NCLAT) placed on hold the potential transaction following appeals by dissenting creditors unhappy with the contours of the deal.

A two-judge bench headed by officiating NCLAT chairman Ashok Iqbal Singh Cheema stayed the implementation of the resolution plan approved by the National Company Law Tribunal and adjourned the matter till September 7; till then, Videocon are going to be managed by the resolution professional.

Bank of Maharashtra and IFCI had filed a plea opposing the prevailing plan, arguing that the worth realized through the sale to Twin Star Technologies is a smaller amount than the liquidation value, and also that a bulk of the payment are going to be made through non-convertible debentures.

Twin Star Technologies has offered to pay ₹2,962 crore for all 13 group firms of Videocon against admitted claims of ₹64,838 crore. This comprises only 4.15% of the entire outstanding claim and implies a 95.85% haircut for creditors.

The counsel for the dissenting creditors argued that Twin Star Technologies won't make any upfront cash payment and can instead pay the primary instalment following the issuance of NCDs after 25 months. “It is argued that it's matter of concern that the company debtors within the consolidated proceedings had cash of ₹200 crore and therefore the SRA (successful resolution applicant) would usher in just ₹262 crore and from that also, first payment of ₹200 crore are going to be brought in 25 months. Beyond ₹262 crore, the remainder was being brought in just by way of NCDs to be paid in six years”, said NCLAT in its order.

The NCLT in its June 15 order approving the sale of Videocon had expressed surprise that the worth of twin Star’s bid was on the brink of the liquidation value, which was meant to be confidential. “Surprisingly, the resolution applicant also valued all the assets and liabilities of all the 13 companies and received almost an equivalent value of the registered valuers”, the NCLT said in its order.

The liquidation value and fair market price are kept confidential and informed to the committee of creditors (CoC) only at the time of finalizing the resolution plan, as per regulations.

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