The National Company Law Tribunal’s (NCLT) Mumbai bench admitted the insolvency petition filed by lenders against Videocon Industries after the company failed to repay its Rs 210 billion debt.
The lenders initiated action against the company after the Reserve Bank of India identified it in its second list of companies for debt resolution under the Insolvency and Bankruptcy Code in December last year.
Videocon Industries' total consolidated debt is Rs 440 billion but the lenders have not taken its foreign arms to the bankruptcy court as they are still repaying their debt. Almost half of Videocon’s debt is housed in its foreign arm.
Soon after it was identified for debt resolution, Videocon had moved the Bombay High Court against State Bank of India and the Reserve Bank of India where the matter was pending since then. Meanwhile, the banks conducted a forensic audit on the company which gave it a clean chit.
Videocon officials were not available for comment.
Videocon had earlier made an offer to the lenders to sell off its assets to pay its domestic debt by selling its global assets. The company said its overseas debt is backed by global oil assets and is not part of the IBC process and does not foresee any problem servicing its overseas loans. The company was declared a non-performing asset by Dena Bank in early 2017 leading to a sharp fall in its share prices. Videocon shares closed at Rs 9 on the BSE on Wednesday.
In the last two years, Videocon sold its Kenstar brand to Everstone Capital to repay its loans. The group had assured banks that it would also sell its land bank to repay debt. The company’s headquarters in Fort, Mumbai was sold for Rs 3 billion last year, and now houses Tata group’s temporary headquarters.