NCLAT rejects Venugopal Dhoot offer to settle dues of Videocon arm Trend Electronics
The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea by former Videocon Industries chairman Venugopal Dhoot against an NCLT order allowing liquidation of Trend Electronics, a Videocon Group company.
The NCLAT also refused to accept the request for withdrawal of corporate insolvency process (CIRP) against Trend Electronics under Section 12A of IBC Act.
Venugopal Dhoot of Videocon Industries had requested the appellate tribunal to direct the NCLT to close the CIRP of Trend Electronics by treating the same to have been withdrawn under Section 12A of the IBC by acceptance of the restructuring proposal submitted by him.
However, the NCLAT in its order argued that where CoC has already been constituted and the resolution plan were under consideration by the Committee of Creditors (CoC), the application filed by the Appellant cannot be treated to be an application for settlement under Section 12A.
“Any proposal for re-structuring cannot be treated to be the proposal under Section 12A, hence, we do not find any error in rejecting the application filed by the Appellant. Moreover, there is no consent by 90% of CoC in favour of 12A proposal of the Appellant,” the NCLAT said in its order on passed on 10 May 2023.
Earlier, the Mumbai bench of the NCLT in a verdict passed on 10 February had ordered liquidation of Trends Electronics. The NCLT noted that the CoC had voted against all the three resolution plans and the offer for settlement under Section 12A by Venugopal Dhoot, and approved liquidation of the company. Trend Electronics had received three resolution plans.
Venugopal Dhoot’s one-time settlement proposal contained two options. First, the Videocon Industries promoter proposed to modernise the operations of the Trend Electronics and continue doing job work of manufacturing of set-top boxes but to modern specifications. Through this, he proposed to repay an amount of Rs. 400 crores to the financial creditors over a period of ten years and the other one is if the Applicant is allowed to use the “Videocon” and “Kelvinator” brands for the corporate debtor, then the Corporate Debtor may be able to pay amount of Rs 3,000 crores to the financial creditors over a period of ten years. However, the CoC rejected the proposal.
Insolvency resolution process against Trend Electronics was started by State Bank of India in April 2018 after the former defaulted on a payment of Rs 457 crore. Trend Electronics manufactures set top boxes for Videocon d2h.
Also Read: Why did NCLAT throw out petition by Venugopal Dhoot in Videocon Industries CIRP case
