The National Company Law Appellate Tribunal (NCLAT) has set aside the Mumbai bench of National Company Law Tribunal’s (NCLT) order approving the resolution plan submitted by Vendata’s Twin Star Technologies. It has remitted the matter back to Videocon’s committee of creditors (CoC) for fresh bids.
Bank of Maharashtra, Small Industries Development Bank of India (Sidbi), and IFCI had appealed against the NLCT order in NCLAT in July 2021, following which the appellate tribunal had stayed the NLCT order. They were the dissenting financial creditors in the committee of creditors.
Bank of Maharashtra, in its appeal, had alleged that the order of NCLT approving the resolution plan was “ex-facie illegal”, bad in law, and contrary to the settled provisions of the Insolvency and Bankruptcy Code (IBC) of 2016. The bank has an exposure of Rs 1,216.88 crore to the Videocon Group.
In June last year, the Mumbai bench of NCLT had approved the resolution plan of Twin Star Technologies -- a promoter entity of the Vedanta Resources group -- for the Videocon group. But it had pointed out that the successful resolution applicant is "paying almost nothing" as the amount offered is only 4.15 per cent of total outstanding claim. It noted the hair cut for all the creditors is 95.85 per cent and suggested to both committee of creditors (CoC) and the successful applicant an increase in the payout.
In the Videocon matter, out of a total claim amount of Rs 71,433.75 crore, admitted claims were Rs 64,838.63 core, and the resolution plan approved was for an amount of only Rs 2,962.02 crore, which constituted only 4.15 per cent of total outstanding claim amount and the total hair cut to all the creditors was 95.85 per cent.
NLCT in its order had requested both committee of creditors (CoC) and successful resolution applicant to increase the payout amount to the operational creditors, especially MSMEs.
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