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IFCI files a complaint with the NCLT against Videocon's debt resolution as oil assets to be included

IFCI Ltd., a Videocon lender, has filed a petition with the National Company Law Tribunal to stop the other lenders from selling Videocon Industries' oil assets and consumer durables company separately.

While the debt of oil assets has been classified as Videocon Industries' consolidated debt, the value of oil assets is not included in VIL's resolution, according to IFCI, which is one of Videocon Industries' lenders. IFCI, Sidbi, and Bank of Maharashtra, which together own 4% of the voting shares in the Committee of Creditors, have also filed an appeal in the NCLAT against VIL's debt resolution, claiming that the recovery is insignificant and that accepting a 96 percent haircut makes no sense.

VIL and Videocon Oil Ventures' oil assets should be included in VIL's consolidated resolution plan, according to the NCLT Mumbai. In reality, the information memorandum soliciting VIL's offers made no mention of VIL's oil assets, thus hurting the company's valuation. The NCLAT is currently hearing an appeal against the NCLT order.

The lenders have requested separate bids for Videocon's oil assets, which are presently worth at Rs 15,000 crore, and 11 entities have showed interest in purchasing them.

TwinStar, Vedanta's holding company, has already won the contract to buy Videocon's Indian assets for Rs 3,000 crore and has offered the lenders a 6% interest in VIL.

In 2018, VIL was referred to the National Company Law Tribunal (NCLT) for defaulting on Rs.62,000 crore in loans. The loans comprised Rs 20,000 crore in corporate guarantees from VIL, the flagship company, under the obligor-co-obligor arrangement for the oil and gas business. Indian banks filed claims in respect of the guarantee when the business was brought to the NCLT, while VOVL ran its own corporate bankruptcy resolution procedure, which controlled all of the oil and gas assets.

The bankers simultaneously filed claims against the borrower (VOVL) and the guarantor (VIL) at the NCLT. While VIL's standalone debt of Rs. 30,000 crore was settled when TwinStar won the battle for Indian assets, the balance of VIL's debt would be settled once the lenders choose the highest bidder for Brazilian assets.

Last year, VIL's promoters, the Dhoot family, filed an application with the committee of creditors under Section 12A of the Insolvency and Bankruptcy Code, but failed to receive the required 90% vote from the lenders. TwinStar's bid had been approved by the lenders in December of last year.

After the Supreme Court withdrew its wireless telephony licence in 2012, and VIL's investment in the telecommunications (telecom) arm went bad, Videocon Group went bankrupt. At the same time, the telecom arm's debts from Indian banks had turned into non-performing assets.


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