Appellate Tribunal Halts Vedanta's Takeover Of Videocon Industries After NCLT's Nod Earlier
NCLAT has stayed the resolution plan's implementation and adjourned the case to September 7, till then the company will be managed by the resolution professional.
The National Company Law Appellate Tribunal (NCLAT) has stayed Vedanta Group's winning bid for debt-ridden Videocon Industries, following an appeal by dissenting creditors dissatisfied with the value realised through the resolution.
A two-judge bench led by officiating NCLAT chairman Ashok Iqbal Singh Cheema has stayed the resolution plan's implementation and adjourned the case to September 7, till then the company will be managed by the resolution professional.
"Considering the observations of the Adjudicating Authority and the submissions made by the learned Sr. Counsel for Appellants in both these Appeals and the grounds raised in these Appeals, and considering the exceptional facts of the present matter the Impugned Order is stayed till the next date and status quo ante as before passing of the Impugned Order is directed to be maintained," read the judgment, a copy of which is reviewed by ABP News.
"Resolution Professional will continue to manage the Corporate Debtors as per provisions of IBC till the next date," the judgment further added.
A Mumbai bench of the National Company Law Tribunal (NCLT) had last month approved the resolution plan submitted by Twinstar Technologies, promoter entity of Vedanta Resources group, for the Videocon Group.
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The NCLT had observed that the successful resolution applicant is "paying almost nothing" because the amount offered is only 4.15% of the total outstanding claims.
It noted that the hair cut for all creditors is 95.85% and advised both the committee of creditors (CoC) and the successful applicant to increase the payout.
The Resolution Professional admitted were worth Rs 64,838.63 crore out of the total claim amount of Rs 71,433.75 crore, and the NCLT approved resolution plan for only Rs 2,962.02 crore, or 4.15% of the total outstanding claim amount, meaning 95.85% haircut to all creditors.
One of the dissenting creditors, the Bank of Maharashtra, in its appeal claimed that the NCLT's approval of the resolution plan is "ex-facie illegal," "bad in law," and contrary to the settled provisions of the Insolvency and Bankruptcy Code of 2016.
"The primary ground of appeal is that the financial creditor is being paid less than the liquidation value which is in violation of Section 30(2)(b) of the Insolvency and Bankruptcy Code. At the onset, the Court has granted a stay which means that the Bank of Maharashtra was able to convince NCLAT about the errors in the decision of the NCLT in approving the resolution plan," Ashish K Singh, managing partner of law firm Capstone Legal told ABP News.
The Bank of Maharashtra, which has an exposure of Rs 1,216.88 crore to the Videocon Group, claimed that the “resolution plan” provided for payment to the dissenting financial creditors by way of non-convertible debentures (NCDs) and equities, which is not permissible under IBC.
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