August 13, 2019

National Company Law Tribunal Gives Green Signal To Consolidate Insolvency Process Of 13 Videocon Companies

[ By Bobby Anthony ]


The National Company Law Tribunal has given the green signal to consolidate insolvency proceedings involving 13 Videocon group companies into a single process.

The move is expected to speed up Videocon’s insolvency resolution as well as lead to faster processing of other bankruptcy cases involving multiple entities which are part of the same corporate group.

The NCLT’s order came in response to a petition filed by the State Bank of India, which had sought consolidation of insolvency proceedings of 15 Videocon group companies on the grounds that their operations were connected and a combined process would yield better realisation of their value.

After the tribunal’s order, prospective suitors would be required to submit a single resolution plan for all 13 Videocon Group companies.

However, two Videocon group companies, namely KAIL Ltd and Trend Electronics, have been left out of the consolidated proceedings.

According to the NCLT, these two companies are not to be directly consolidated because they have their own independent sources of income and they also have liabilities which could be segregated based on their assets and liabilities ratio.

It may be recalled that the SBI had filed multiple pleas in various courts against Videocon Industries Ltd and 14 other companies 2018, in order to recover Rs 20,000 crore, after they had defaulted on payments to a consortium of banks.

The NCLT order is expected to 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.

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