February 13, 2020

Include Videocon Oil Business In Insolvency Process: NCLT

[ By Bobby Anthony ]


The National Company Law Tribunal (NCLT) has ordered the inclusion of Videocon oil businesses in Brazil and Indonesia as part of insolvency proceedings being conducted in India

Incidentally, the NCLT order is the first instance of overseas incorporated subsidiaries being brought under the ambit of Indian insolvency laws.

In this case, Videocon’s assets include stakes in overseas oil blocks held through Videocon arms incorporated in the Cayman Islands and British Virgin Islands, which were purchased after Videocon entered an agreement with state-run Bharat Petroleum Corporation Ltd.

The two partners had reportedly invested more than USD 2 billion in development of the assets.

Lender State Bank of India had appointed Deloitte as advisor for sale of Videocon’s stake in the Indonesia and Brazil blocks in August 2019. SBI opposed inclusion of the assets as part of local insolvency proceedings at NCLT.

Videocon, an Indian-incorporated entity argued that loans taken by overseas subsidiaries were guaranteed by it, making the parent company the ultimate beneficial owner of those assets. Videocon and its promoter Venugopal Dhoot also claimed at NCLT that this was reason enough for them to be included in the local proceedings.

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