The swirl of suspicions over Videocon’s sell-off3 min read . Updated: 21 Jul 2021, 12:11 AM IST
Most lenders accepted a bid for the bankrupt group just above the scrap value of its assets, but not all. The sale deserves scrutiny. Process integrity is crucial to our bankruptcy code’s success
It was a business that once played a volumes game on thin margins for rapid expansion with enviable confidence, back in the 1990s. But it is for the speed of its diminishment that Videocon has drawn awe in recent times. Soon after Venugopal Dhoot’s overstretched group went bust in 2017, Videocon Industries was hit by an exposé of murky loans taken from ICICI Bank, a scandal involving a mispriced equity deal between the borrower and spouse of the lender’s chief in alleged lieu of loan approvals. Today, suspicions swirl around the price at which Videocon’s 13 group companies were being hawked after the group underwent bankruptcy proceedings. The would-be buyer was Twin Star Technologies, a part of Anil Agarwal’s London-based Vedanta Group, once known for its ability to salvage rundown factories, which got a nod from the National Company Law Tribunal this June to acquire Videocon for ₹2,962 crore, a sum described as “almost nothing" by the bench. On Monday, the appellate tribunal stayed the sale—on appeals filed by dissenting creditors IFCI and Bank of Maharashtra, both of which had objections to the approved deal’s contours. This episode has revived questions of how well our bankruptcy code works in selling off firms that go out of business.