Image Courtesy: Economic Times

According to sources, the Mumbai bench of the National Business Law Tribunal (NCLT) authorised the purchase of debt-ridden Videocon Industries Ltd by Vedanta group company Twin Star Technologies on Tuesday, in India’s first group insolvency settlement.

The resolution plan approved by the consolidated committee of creditors (CoC) of the 13 Videocon group companies included in the bankruptcy proceedings will result in a recovery of around Rs 3,000 crore against lender claims of around Rs 62,000 crore, about half of which was in the form of a guarantee for the debt of Videocon Oil Ventures Ltd, which is set to go through a separate insolvency proceedings.

Videocon Industries Ltd, a consumer durables firm, was among 26 big defaulters recommended to the NCLT by the Reserve Bank of India (RBI) in the banking regulator’s second batch of businesses recommended for insolvency proceedings.

According to analysts, the resolution of the Videocon group’s 13 firms is the first group bankruptcy resolution completed under the Insolvency and Bankruptcy Code (IBC) and may serve as a test case for future group insolvency cases.

The bankruptcy court merged the insolvency processes of 13 group firms, citing operational interdependence and shared obligations, and excluded two firms — KAIL Ltd and Trend Electronics Ltd — that are conducting separate insolvency processes. A big creditor for KAIL, responsible for more than 40% of the company’s outstanding debt, had also pushed for separate procedures, claiming that if bankruptcy procedures were merged, its share of the CoC would be decreased.

According to sources familiar with the situation, even though the final proposal accepted by the CoC was a combined proposal for all 13 group firms, the group firms might have been bought independently to provide potential bidders more options. The insolvency process was led by resolution professional (RP) Abhijit Guhathakurta, with Deloitte India serving as the RP’s adviser in operating the group’s operations, selling assets to possible purchasers, and completing the resolution process.

Moreover, In the midst of volatility, the market fell from a record high to close in the red today. The Nifty fell 105 points to 15,635 after a 233-point trading range, while the Sensex fell 405 points to 51,871 and the Nifty Bank fell 285 points to 34,801. Tata Motors, Adani Ports, Shree Cement, L&T were the Top Nifty Losers and Adani Power slipped from its Upper Circuit.


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