The National Company Law Appellate Tribunal on January 5 set aside the approval given by the insolvency court to Vedanta's resolution plan for the debt-laden Videocon group. The NCLAT has remitted the matter to the committee of creditors for "completion of the process relating to CIRP" in accordance with the law.
The NCLAT had earlier stayed the buy-out of Videocon group by Vedanta’s Twin Star Technologies after the winning bid was challenged by dissenting financial creditors – Bank of Maharashtra and IFCI – over the low value realised through the successful resolution plan.
The appellate tribunal while pronouncing its order said that the approval given to the Rs 2,900 crore plan by Twin Star, both by the lenders' panel as well as the adjudicating authority, was not in line with Section 31 of the Insolvency and Bankruptcy Code, as such it was set aside. The resolution plan submitted by Twin-Star did not fulfill the requirements set out under Section 30(2)(b) of the IBC, the tribunal also said.
The creditor's panel will not be required to carry out the procedure for completing the corporate insolvency resolution procedure in accordance with the provisions of the IBC.
The dissenting creditors in their appeal had highlighted that the value of Vedanta’s resolution plan for Videocon was almost close to the liquidation value – an observation that was also made by the National Company Law Tribunal that approved the bid.
Former promoter and managing director of the Videocon group, Venugopal Dhoot, had also challenged the resolution plan approved by the NCLT in its capacity as the adjudicating authority. Dhoot had called for fresh bids to be held for the debt-laden group of companies and termed as “arbitrary” the commercial wisdom exercised by the committee of creditors.
Dhoot also urged the appellate tribunal to direct the lenders’ panel to consider his offer in the fresh round of bids.
The bid by Twin Stars which was approved by the CoC and the NCLT was for an amount of Rs 2,900 crore which meant a haircut of almost 96% for the lenders.
In a surprising turn of events, the committee of creditors led by the State Bank of India, which had earlier agreed to take home merely 4% of the claims under Twin Star’s resolution plan, asked the NCLAT to remit the case for carrying out fresh bids two months after the dissenting lenders’ appeal.
After a detailed hearing in the case, the NCLAT had reserved its judgment in December.
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