NCLAT stays implementation of Videocon resolution plan
In a setback to the resolution process of Videocon Industries and other group companies, the National Company Law Appellate Tribunal (NCLAT) has stayed the implementation of resolution plans as approved by the Mumbai bench of the National Company Law Tribunal (NCLT).
The NCLAT noted ‘exceptional facts’ presented by the appellant – Bank of Maharashtra, one of the dissenting financial creditors – to stay the NCLT order approving the resolution plan of Vedanta Ltd.
The NCLAT has asked the resolution professional to maintain status quo and directed him to continue to manage Videocon and its group companies according to the provisions of Insolvency and Bankruptcy Code (IBC) till the next date of hearing on 7 September 2021.
Bank of Maharashtra had moved NCLAT against the NCLT order approving the resolution plan on the pretext that the amount offered to the dissenting financial creditors as per the resolution plan is lower than the liquidation value in violation of the provisions of Insolvency and Bankruptcy Code (IBC).
Bank of Maharashtra is also peeved at the fact that what is proposed to be paid is only part in cash and major part is in the form of NCDs.
The appellant has raised the question whether NCDs could be issued instead of paying in cash. The counsel of the appellant also pointed out that although the resolution plan provided that NCDs would be issued, the Adjudicating Authority had directed payment of cash which would be changing the Resolution Plan as approved and it could not have been done without sending back the matter to CoC.
The counsel of the appellant also pointed out that there was also a breach of confidentiality clause with regard to the Liquidation Value and although the Adjudicating Authority noticed the same, the Resolution Plan still came to be approved which should not have been done as the Liquidation Value and Resolution Plan Value were surprisingly very close.
The Liquidation value of Videocon and its group companies together was Rs 2568.13 crore while the resolution plan provided for Rs. 2900 crore against creditors’ claim of Rs 65,000 crore.
The Successful Resolution Applicant — Vedanta ltd — and the Resolution Professional argued that the Resolution Plan itself had provisions that the payments would be in compliance with Section 30(2)(b) and other provisions of IBC and it is stated that although the NCDs were stated in the Resolution Plan, as directed by the Adjudicating Authority the payment can be by way of cash.
Also See: Under Videocon resolution plan, govt agencies to receive Rs 5.7 crore against Rs 1,587 crore claims
