DoT moves NCLAT against resolution plan of Videocon group companies

The three-member bench of the NCLAT said that the Appellate Tribunal has already stayed the NCLT order dated July 19, 2021 to maintain “status quo” and the resolution professional will continue to manage the cases of Videocon Industries as per the provisions of the Act. Insolvency and Bankruptcy Code.

“In view of the submissions made by the appellant/applicant (DoT) and the order to remain on par, there is no need to go into details,” the NCLAT said.

DoT, in its petition, has requested the Appellate Tribunal to set aside the order passed by the Mumbai Bench of the NCLT on June 8, 2021. 2,962 crore takeover bid by Anil Agarwal’s Twin Star Technologies.

DoT has submitted before the NCLAT that defaulting telecom companies cannot be allowed to exit their liability by triggering the corporate insolvency resolution process.

The NCLAT has directed to list the DoT’s appeal for hearing on January 11, 2022.

The NCLAT order passed on December 8, 2021 said, “The respondents are directed to file the ‘reply-affidavit’ within the next two weeks and the rejoinder, if any, may be filed within one week.” “

The respondents in this case include Videocon Industries and Videocon Telecommunications.

Videocon Telecommunications had secured arrears along with 131 bank guarantees from SBI in favor of DoT for continuance of business and as per license agreement for Unified License (Access Services). 881.92 crores.

However, the said bank guarantee has not been allowed to be enforced “illegally” due to pending proceedings before the NCLT, the DoT through its counsel submitted before the National Company Law Appellate Tribunal (NCLAT).

The DoT’s submission recorded in the NCLAT order said that the IBC cannot be invoked to address the “fraudulent and malicious intent” of withholding huge dues payable to the government and others.

Further, under the approved resolution plan, operational creditors were asked to forfeit all their dues under the guise of Corporate Insolvency Resolution Process (CIRP), it alleged.

It added that the DoT is hardly going to get a meager amount of 0.12% of its total claim.

DoT said, “The Code has been put in place for resolution of companies under stress and where the management has no ulterior motive to exit the liabilities.”

Earlier, passing a 47-page-long judgment on June 8, the NCLT had observed that the creditors of debt-ridden Videocon Industries Ltd would undergo a haircut of around 96% on their loans and the bidder is “paying almost nothing”.

The NCLT had observed that the resolution plan was giving 99.28% to operational creditors, which it had sarcastically indicated as “hair cut or toner, total shave”.

Disgruntled financial creditors – Bank of Maharashtra and IFCI Ltd – and Venugopal, former chairman and managing director of Videocon Group, have already challenged the NCLT order.

In September, SBI, the major lender to Videocon Industries, had approached the NCLAT requesting re-bids for 13 debt-ridden group companies. 2,962 crore takeover bid by Anil Agarwal’s Twin Star Technologies.