The resolution plan of the Vedanta group has been approved by the NCLT (National company law tribunal) which makes it free to acquire the Videocon’s 13 companies for around three thousand crores. Twin Star technologies Ltd., which is owned by the Vedanta group’s owner Anil Agarwal will take over Videocon’s 13 companies as per the resolution which was thereby approved in the NCLT, Mumbai by paying around 3 billion rupees. This will be paid as cash of Rs. Five hundred crores within 90 days from then and the rest as non-convertible debentures over a period of time.
Initially, the Vedanta group had asked for claim of 61770 crores to the creditors but the amount that was finally submitted is argued to reasonable though as the Videocon was closed for several years and as it was going through bankruptcy proceedings for quite some time. But the general opinion from various spheres is that the amount approved is pretty low. The resolution was approved by the Mumbai bench in the early June itself but the written order which has been released now gets shocking reaction and surprise as the value accepted by the committee of creditors is low. It is to be noted that lenders took Videocon Industries to the tribunal in 2018, after the Reserve Bank of India identified it as part of the second list of major defaulters. Videocon’s debt in 2019 was about 6350 crores, as indicated by disclosures on the company’s website relating to a bankruptcy case back then.Around 5340 crores of this amount were owed to more than ten banks and other recognized financial creditors. It is remarkable that it is one of the first resolution processes to happen in a group level which would highly imply that it could be a well supporting precedent for the upcoming cases in this domain in India.
But one of the main mysteries in this case was that the amount proposed by the Vedanta group in the resolution process was very much close to the liquidation value which is construed in all aspects to be highly confidential. According to the Corporate insolvency resolution process regulations, the fair market value and the liquidation value are to be kept very confidential and to be disclosed to the committee of creditors (CoC) only while finalising the resolution plan.
Videocon is one of the very first 12 corporations that happen to be facing bankruptcy after the 2017 directions that were released by the Reserve Bank of India (RBI).