Lenders to miss March-end deadline for Videocon resolution

Indian lenders are set to miss the March-end deadline for the resolution of Videocon Industries with the NCLT (National Company Law Tribunal) adjourning the hearing on Vedanta offer yet again. Banks had claimed a massive Rs 46,000 crore from the Videocon group companies after it was sent for debt resolution and are awaiting resolution since December 2017.

In December last year, Vedanta had won the race to acquire Videocon Industries after banks sought consolidated plan from bidders. While Vedanta's offer of Rs 3,000 crore was far below the expectations of lenders, there were no other attractive bids. 

A banker close to the development said with the NCLT adjourning the matter to next month, they will miss the deadline. "The lenders are not even getting 10 per cent of their dues in VIL resolution and every month banks are losing Rs 30 crore in lost interest income. The delay is the worst outcome for all stakeholders including to the acquirer," said a banker close to the development. Vedanta offer has been made by a promoter owned entity and is not connected to the listed company. VIL's liquidation value was Rs 2,600 crore.

Videocon had started defaulting to bank loans after the Supreme Court cancelled all its wireless telecom licenses in 2012, which resulted in a loss of Rs 10,000 crore for Videocon's equity. The loans given to the telecom company also became non performing assets.

In 2017, Videocon was in the second list of companies, which were identified by the Reserve Bank of India as fit cases for debt resolution under the Insolvency and Bankruptcy Code, 2016. This was despite SBI clearing a debt restructuring proposal of the company. This plan was nixed by the RBI. Apart from VIL, there are several other high profile cases like Bhushan Power and Steel and Reliance Communications, Lanco, which are stuck in litigation and there is no clarity when these accounts will be resolved.