After the principal bench of the National Company Law Tribunal (NCLT) directed to transfer all insolvency petitions related to Videocon Group being heard in a single tribunal in Mumbai, the consortium of lenders and the resolution professional of key companies promoted by Venugopal Dhoothave approached the NCLT to treat the entire group as one entity as well as to have one resolution professional for the entire group.
On Friday, Sumant Batra, an advocate who was appearing for the resolution professionals (RP) of Videocon Industries Ltd and Videocon Telecommunications Ltd argued in the Mumbai bench of the National Company Law Tribunal that they are seeking single resolution plan and a single RP for all 14 group companies.
“Consolidation is in the favour of everyone. When the banks gave the loan to the group, it was for the entire group and most companies were co-obligators for each other and hence a single resolution process for all the companies is required,” argued Batra.
“Largely a group floats several companies either to ease of business or for the tax purposes but the whole world including lenders sees them as a single economic entity,” he further added.
However, countering this, a lawyer for the Trend Electronics Marathwada Workers Union, argued that the company has around 700 workers and it is separately listed company but consolidating it with all other companies will have an adverse impact on the company.
“Trend Electronics is in the business of set-top boxes under the brand name of ‘Videocon d2h’. Currently, the business of this company is not related to any other business and hence there are better chances that some domestic player like Tata Sky or any foreign player can acquire the asset on standalone bases rather than consolidating it with other unrelated businesses.”
Similarly, Pradeep Sancheti, a senior counsel who was appearing for one of the lender of another Videocon Group company KAIL Ltd, that manufactures kitchen appliances under the brand name of Kenstar argued that they have currently around 40% voting rights in the Committee of Creditors (CoC) of the company but with consolidation their share will be around 2%.
“We have lent around ₹450 crore to KAIL Ltd and we believe that as per the law each company will have to dealt separately,” added Sancheti.
Countering these arguments, Ravi Kadam, senior counsel, who was appearing for the State Bank of India (SBI) led consortium argued that the lenders want to bundle all the entities as one for the maximization of the assets. “We may not have any such precedent but with this case, we can set one such,” he further added.
According to Videocon’s FY17 annual report, the company is liable to repay the liability of other group companies to the extent of ₹5,082 crore as on 31 March 2017. The company’s total debt stood at ₹19,506 crore as of March last year.
After hearing arguments, the single bench of NCLT of M.K. Shrawat has reserved its order in the case.
Source: Livemint, January 28,2019