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MUMBAI : The National Company Law Appellate Tribunal (NCLAT) on Wednesday set aside an order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) approving the bid by Anil Aggarwal-led Twin Star Technologies Ltd for the bankrupt Videocon Group.

The resolution plan, which involved acquiring the company for 3,000 crore, has been remitted back to the committee of creditors (CoC), Justice Jarat Kumar Jain said. 

Provisions under section 32 of the Insolvency and Bankruptcy Code (IBC) have not been complied with during the corporate insolvency resolution process, Justice Jain said. 

Thus, the CoC led by State Bank of India (SBI) may have to invite fresh expressions of interest for the cash-strapped company. 

“We learnt about the order, and it will further delay Videocon’s resolution. We are awaiting the written order and will, thereafter, take appropriate action," said Gopal Jain, the advocate for Twin Star Technologies Ltd.

The NCLAT’s decision to refer the resolution plan back to the CoC is the first such instance since resolutions via the IBC were notified in 2017. This also comes amid concern that IBC resolutions are happening at deep haircuts, with assets being sold at throwaway prices. 

The resolution value of 3,000 crore against a debt of 61,770 crore amounts to a 94% haircut and is only just above the liquidation value of 2,000 crore. 

On 8 June 2021 the Mumbai bench of the NCLT had approved the resolution plan of Twin Star Technologies. Lenders to Videocon had approved the resolution plan in December 2020. 

Videocon Industries and its 13 group entities owe nearly 61,770 crore to the financial creditors of the company, according to the company’s official website. Of this, the largest lender, SBI, has claims of 11,152 crore, while IDBI Bank has claims worth 9,922 crore. 

The NCLAT order follows a plea by the dissenting financial creditors, Bank of Maharashtra, Small Industries Development Bank of India, and IFCI Ltd. These three creditors make up 3% of the CoC and are seeking an additional 9 crore in the resolution plan, said a person with direct knowledge of the matter. 

“Commercially, it is a disastrous decision as the asset had only two bidders, the higher of which was Twin Star. Further delay will only cause value erosion as the assets remain idle and non-operating," this person said, declining to be named. 

Videocon Industries, which is owned by the Dhoot family, was taken to bankruptcy court after it failed to repay 230 crore to SBI in 2017. The issue languished for a long time because of a variety of factors, including the company’s former promoters making a bid for it, though they were not successful. Videocon Industries was previously India’s top manufacturer of white goods, including refrigerators and televisions. Later, it expanded into telecommunications and oil.

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