Twin Star Technologies moves SC against NCLAT stay in Videocon case

Twin Star Technologies, a promoter entity of the Vedanta Resources group, has moved the Supreme Court against the National Company Law Appellate Tribunal (NCLAT) order, which set aside the approval granted by the Mumbai bench of the National Company Law Tribunal (NCLT) to the resolution plan put forward by the company for acquiring the Videocon Group.

The petitioners have pointed to the fact that the NCLAT order is contrary to previous Supreme Court judgments. The judgments have emphasised that an approved resolution plan is a binding contract and cannot be withdrawn. Also, the insolvency and bankruptcy code (IBC) has no provision for withdrawal of a resolution plan or for the committee of creditors (CoC) to revisit their wisdom.

Further, the petitioners have also pointed to the fact that a successful resolution applicant has no recourse under the IBC. The only assurance investors and resolution applicants have — that an approved resolution plan is sacrosanct — is lost because of NCLAT’s order.

Also, they have contested the point raised by NCLAT in its order regarding prior approval not being obtained from the Competition Commission of India (CCI).

Earlier this month, NCLAT set aside the NCLT order, which had approved the resolution plan of the Videocon group by Twin Star Technologies.  It also remitted the matter back to Videocon’s CoC for completion of the corporate insolvency resolution process (CIRP) in accordance with the IBC.

Bank of Maharashtra had appealed against the NCLT order in the NCLAT in July 2021, following which the appellate tribunal had stayed the order.

Bank of Maharashtra, Small Industries Development Bank of India (SIDBI), IFCI and ABG Shipyard were the dissenting financial creditors in the CoC of Videocon Industries.

In June last year, the NCLT approved the resolution plan of Twin Star Technologies for the Videocon group. But it had pointed out that the successful resolution applicant is “paying almost nothing”. This is because the amount offered is only 4.15 per cent of the total outstanding claim.

It had noted that the haircut for all the creditors was 95.85 per cent and suggested to both CoC and the successful applicant to raise the payout.

In the Videocon matter, out of a total claim amount of Rs 71,433.75 crore, claims admitted were to the tune of Rs 64,838.63 crore. The resolution plan that was approved was for only Rs 2,962.02 crore.