IFCI moves NCLT against Videocon debt resolution, wants oil assets included

IFCI, Sidbi and Bank of Maharashtra have also filed an appeal in the NCLAT against VIL's debt resolution, saying recovery is miniscule and it makes no sense to accept a 96% haircut

Delhi-based lender IFCI Ltd has moved the National Company Law Tribunal (NCLT) opposing the other lenders' plans to sell Videocon Industries’ oil assets and consumer durable business separately.

IFCI, which is one of the lenders of Videocon Industries, argues that while the debt of oil assets has been treated as Videocon Industries’ consolidated debt, the value of oil assets is not included in VIL’s resolution, thus impacting its recovery. IFCI, Sidbi and Bank of Maharashtra, holding 4 per cent of voting shares in the Committee of Creditors, have also filed an appeal in the NCLAT against VIL's debt resolution, saying that recovery is miniscule and it makes no sense to accept a 96 per cent haircut.

The NCLT Mumbai had earlier ruled that VIL and Videocon Oil Ventures’s oil assets should be part of the VIL's consolidated resolution plan. In fact, when the information memorandum calling for VIL’s bids was issued, it did not have any mention of VIL’s oil assets, thus impacting its valuation. An appeal against the NCLT order is currently pending in the NCLAT.

The lenders have called for separate bids for Videocon’s oil assets which are currently valued at Rs 15,000 crore and 11 companies have expressed their interest to acquire it.

Vedanta’s holding firm, TwinStar, has already won the mandate to buy Videocon’s Indian assets for Rs 3,000 crore and has offered a six per cent stake in VIL to the lenders.

VIL was referred to the National Company Law Tribunal (NCLT) in 2018 for defaulting on loans worth Rs 62,000 crore. The loans included corporate guarantees given by VIL, the flagship company, under the obligor-co-obligor structure for the oil and gas business to the extent of Rs 20,000 crore. Once the company was sent to the NCLT, Indian banks filed their claims in respect of the guarantee while, at the same time, running the corporate insolvency resolution process of VOVL (formerly Videocon Oil Ventures), separately which held all the oil and gas assets.

At the NCLT, the bankers filed claims against both the borrower (VOVL) and the guarantor (VIL) simultaneously. While the VIL standalone debt worth Rs 30,000 crore was resolved with TwinStar winning the race for the Indian assets, the rest of VIL’s debt will be completed once the lenders select the highest bidder for the Brazilian assets.

The promoters of VIL — the Dhoot family — had submitted an application to the committee of creditors under Section 12A of the Insolvency and Bankruptcy Code last year, but failed to get the mandatory 90 per cent votes from the lenders. The lenders had cleared TwinStar’s offer in December last year.

Videocon Group fell into a financial crisis after the Supreme Court cancelled its wireless telephony licence in 2012 and VIL’s investment in the telecommunications (telecom) arm turned bad. At the same time, the loans taken by the telecom arm from Indian banks had also become non-performing assets.