Videocon IBC: NCLT approves Twin Star Tech’s plan; VIL and VAIL to be delisted

By LE Desk

New Delhi, June 15, 2021: The National Company Law Tribunal (NCLT) has cleared the resolution plan for 13 Videocon Group companies with presence in oil and gas, consumer electronics, home appliances, telecom, real estate. The two-judge bench of the insolvency court thus paved the way for their acquisition by Anil Agarwal-led Twin Star Technologies Limited at over 95 percent haircut for lenders.

The 13 Videocon group companies include Videocon Industries, Videocon Telecommunications, Electroworld Digital Solutions, Value Industries, Evans Fraser & Co, CE India, Millennium Appliances (India), SKY Appliances, PE Electronics, Techno Electronics, Applicomp India, Techno Kart India and Century Appliances.

In the order, the National Company Law Tribunal has noted that the registered valuers had arrived at a fair value of Rs 4,069 crore for the 13 companies. And a liquidation value of Rs 2,568 crore. The consolidated resolution amount for the 13 companies offered by Twin Star stands at Rs 2,962 crore against the total admitted claims of Rs 64,938 crore. That comes to 4.89% recovery for secured financial creditors, according to BloombergQuint.

The tribunal expressed surprise at the fact that Twin Star’s bid was so close to the liquidation value, which is meant to be confidential. “Surprisingly the resolution applicant also valued all the assets and liabilities of all the 13 companies and arrived at almost the same value of the registered valuers,” the NCLT order said.

The resolution plan involves the delisting of shares of VIL (Videocon Industries Limited) and VAIL (Value Industries Limited) from BSE and NSE. It also involves a merger of the 11 corporate debtors (Applicomp, CE India, Century Appliances, Electroworld Digital Solutions, Evans Fraser & Co, Millennium Appliances, PE Electronics, SKY Appliances, Techno Electronics, Techno Kart, Value Industries, (except Videocon Telecom Limited) into VIL.

“The Successful Resolution Applicant is paying almost nothing and 99.28 percent hair cut is provided for Operational Creditors (Hair cut or Tonsure, Total Shave). During the course of the hearing it is also submitted that a voluminous number of Operational Creditors are also MSME and if they are paid only 0.72  percent of their admitted claim amount, in the near future many of these Operational Creditors may have to face Insolvency Proceedings which may be inevitable,” the court said, as reported by CNBC TV 18.

The court has named an independent number for a steering committee to “supervise the implementation of the resolution plan, similar to what it did for DHFL recently.

The NCLT order read, “The Resolution Applicant shall act in active consultation with the Steering Committee constituted under the Resolution Plan and the Applicant and the Lead Bank Financial Creditors shall be a member of the Committee. They will supervise the implementation of the Resolution Plan under the discipline of the I&B Code. In addition to the above, this Adjudicating Authority feels appropriate to appoint an Observer Cum Permanent Invitee in the Steering Committee to ensure smooth functioning and change over to the Successful Resolution Applicant accordingly Mr R.K. Agarwal, Former Whole Time Member of SEBI, an expert in the field of Capital Markets and Finance is appointed by this Adjudicating Authority.”

SBI, IDBI Bank, Union Bank of India, Central Bank of India, Bank of Baroda, ICICI Bank, PNB, Indian Bank, EXIM Bank, Bank of India, Canara Bank, IOB are among key lenders to the Videocon Group.​