The National Company Law Tribunal gave the go-ahead on Thursday for consolidating the insolvency proceedings of 13 Videocon group firms into a single process.
The landmark move is expected to quicken Videocon’s insolvency resolution and could pave the way for faster processing of other bankruptcy cases involving multiple entities that are part of one corporate group, legal experts said.
Following the NCLT order, prospective suitors will now have to submit one resolution plan for all the 13 Videocon units, which house the group’s consumer electronics business. The tribunal’s order was in response to a plea by State Bank of India, which sought consolidation of insolvency proceedings of 15 Videocon group companies in January on the grounds that their operations were connected and a combined process would yield better realisation of value.
“There are two companies that are not to be directly consolidated, the reason is that they have their own independent source of income, they also have liabilities that can be segregated based on their assets and liabilities ratio,” the tribunal said. The two companies left out of the consolidated proceedings are KAIL Ltd. and Trend Electronics.
SBI had filed multiple pleas in various courts against Videocon Industries Ltd. and 14 other companies controlled by founder Venugopal Dhoot last year to recover Rs 20,000 crore after they defaulted on payments to a consortium of banks. The court appointed Mahender Khandelwal as the resolution professional. “The order is in the interest of the lenders and ensures maximisation of the value of the assets,” said Sandeep Ladda, a lawyer representing Videocon group and Dhoot. SBI was yet to respond to ET’s queries.
Legal experts said the order will have wider ramifications for other stressed assets where the resolution process has been unusually long because separate insolvency cases were filed against multiple group companies with linked operations.
Videocon’s insolvency proceedings have already been delayed, forcing the National Company Law Appellate Tribunal to pass an order on 5 July directing the NCLT to expedite the process.