Videocon Insolvency: SC agrees to hear Twin Star appeal against NCLAT order

The Supreme Court on February 14 agreed to hear an appeal of Vedanta group’s Twin Star Technologies against the order of the National Company Law Appellate Tribunal, setting aside the approvals given for the company’s takeover of Videocon group under the resolution process.

The apex court has issued notice to the parties on Twin Star’s appeal.

Without passing a formal interim order, the court orally said that it expects that the concerned authorities will not proceed with the fresh round of bids for the distressed group – Videocon.

“We are not passing any interim order but please tell the authorities not to proceed with the process, we will hear the case,” Chief Justice of India NV Ramana said to Solicitor General Tushar Mehta who was representing the committee of creditors (CoC).

Mehta assured the court that no further steps will be taken by the lenders’ panel.

The court’s oral observation came after Senior Advocate Abhishek Manu Singhvi, representing Twin Star, informed the court that the CoC had invited interest for bids in Videocon after the NCLAT order.

The court proceeded to grant time to all the concerned parties to file their responses and will hear the case thereafter.

Vedanta’s Twin Star had approached the top court in appeal after the National Company Law Appellate Tribunal in January set aside the approvals given by insolvency court and Committee of Creditors for the company’s bid for distressed Videocon group.

The value of the approved resolution plan was very close to the liquidation value of Videocon’s assets, a fact that was noted by the insolvency court while approving the plan.

The abysmally high percentage of haircut the banks were taking home in this resolution process prompted the dissenting lenders, led by Bank of Maharashtra, to challenge the entire resolution plan.

The former promoter of Videocon group, Venugopal Dhoot, also challenged Twin Star’s resolution plan for being a very low bid. Dhoot wanted the NCLAT to allow the concerned authorities to consider his offer for reviving Videocon.

While the appellate tribunal had stayed the implementation of the plan during the time the challenge mounted against it was being heard, the committee of creditors took a complete turn on the issue. The CoC that had earlier approved the 95 percent haircut for the banks in this resolution process later urged the NCLAT to remand the insolvency case for fresh bids.

Ultimately, on January 5, the NCLAT set aside the approvals for Twin Star’s resolution plan for Videocon and allowed the pleas by lenders – both majority and dissenting – for new round of bids. Dhoot’s plea was also dealt with in this judgment and was rejected.