Creditors not too keen on Videocon Group promoter’s full-payment proposal
Venugopal Dhoot, the promoter of Videocon Group, had recently offered to pay the full outstanding amount of Rs 31,000 crore to creditors, if the Committee of Creditors (CoC) agrees to consider his application for withdrawal of insolvency cases against 15 of the group companies under Section 12A of the Insolvency and Bankruptcy Code (IBC).
However, media report suggests that the CoC might not take his offer seriously as the repayment plan suggested by the Videocon Group promoter spans 10-15 years. The CoC might instead consider other bids that have come so far. As per media reports, 5-6 interested parties have submitted their resolution application, vote on them would take place within a week.
Dhoot has submitted a proposal under 12A of IBC, and he claims that proposal is similar to what he had submitted in October 2017. As per the original proposal of October 2017, the total debt for which restructuring was considered was for Rs 31,289 crore. This proposal under Section 12A has also considered that entire amount of Rs 31,289 crore including unpaid interest up to 31 December 2020.
However, the proposed payment is apparently spread over 10-15 years, and creditors are not too serious about the plan even if it offers to make full payment. They might instead opt for another plan, which proposes quicker payments even with a haircut.
According to the Videocon Group promoter, he plans to repay the debt by monetizing assets, and through income from consumer electronics, home appliances and affordable housing business.
Under Section 12A of the IBC, the NCLT may allow the withdrawal of insolvency proceedings against a corporate debtor if the committee of creditors approves the proposal by at least 90% voting share.
According to Dhoot, if the COC approves the withdrawal proposal under Section 12A of the IBC, the promoters get to manage the company and service the debt as per the submitted proposal. The lenders (CoC) will continue to hold all pledged shares and approval from them is mandatory for sale/restructuring of any asset, till such time all debts are not cleared.
A total of 15 Videocon Group companies are undergoing insolvency proceedings. The fate of all the 15 will be known soon as CoC is likely to make its decision on whether they are going with Dhoot’s offer or instead it chooses one of the other bidders.
