NCLT allows BPCL arm to acquire Videocon Oil Ventures Brazil assets
The Mumbai bench of the National Company Law Tribunal (NCLT) has allowed Bharat Petro Resources Limited (BPRL) Ventures BV to acquire assets of Videocon Oil Ventures Ltd (VOVL) in Brazil. VOVL is undergoing the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code (IBC).
Videocon Oil Ventures Ltd (VOVL) through its step-down subsidiary Videocon Energy Brazil Ltd (VEBL) holds quotas in IBV Brasilio Petroleo Ltd, which in turns hold participating interests in oil and gas blocks in Brazil. IBV is a joint venture between Videocon Energy Brazil Ltd and BPRL Ventures BV, a Brazil subsidiary of state-owned BPCL.
The resolution professional of VOLV Pravin R Navandar had filed a petition before the NCLT seeking permission to sell VOVL’s Brazil assets to BPRL Ventures BV. The petition was opposed by one of the resolution applicants for VoVL – PetroRio SA.
Under the quota holders’ agreement (QHA) between VEBL and BPRL, both the parties had the ‘first right of refusal’ as far as the sale of the ‘quotas’ of oil and gas assets in Brazil.
As per the agreement between different stakeholders of the Brazilian assets, whenever funds were required cash calls were made and both the quota holders were required to contribute 50% each. While BPRL continued to contribute its share of 50% fund, VEBL due to financial stress could not fulfil its commitments. Due to its inability to respond to the cash calls, VEBL requested BPRL to make the payments. The resolution professional in its submission to the NCLT pointed out that participating interest in IBV was subsisting solely because of BPRL.
During the course of the corporate insolvency resolution process of VOVL, the resolution professional received four offers. Two of the offers – from Eneva SA and PetroRio — stated that the offer would be subject to waiver of existing pre-emptive rights or First Right of Refusal (FROF).
The lenders of VOVL then decided to issue notice to BPRL to exercise its right to refusal and allow it the opportunity to VEBL’s quotas in IBV. On 17 May 2023, BPRL agreed to exercise the first right of refusal and acquire quotas of VEBL. However, its condition for exercising the first right of refusal was that the NCLT must approve the same. The Committee of Creditors (CoC) had approved the offer by BPRL by 99.96% vote share.
Aggrieved by the ouster of PetroRio from the bidding process, it had filed an IA protesting against the sale of VOVL’s oil and gas assets to BPRL. PetroRio also contended that while sale of assets is allowed under IBC but it has to be done through a resolution process.
However, the NCLT brushed aside all objections of PetroRio and reposed its faith on the commercial wisdom of the Committee of Creditors (CoC), and allowed the sale of VOVL’s oil and gas assets in Brazil to BPRL.
Also Read: Videocon Group assets valued without site visits, finds insolvency regulator
