Companies

NCLT allows 13 Videocon group companies to be clubbed

PTI Mumbai | Updated on August 09, 2019 Published on August 09, 2019

File photo   -  Paul Noronha

In a first, the RP will be allowed to consolidate 13 of the 15 companies into a single entity

To speed up the resolution process and also to get better value, the National Company Law Tribunal in a first on Thursday allowed the resolution professional (RP) to consolidate 13 of the 15 Videocon Group companies into a single entity, citing similarity in their operations.

While the nascent domestic bankruptcy law is silent on consolidating different books of the insolvent companies, citing larger interest of lenders and other stakeholders, the Mumbai bench drew examples from British and American bankruptcy laws.

Tribunal judge MK Shrawat said: “We heard the arguments both for consolidation and against it. I think it is time to introduce consolidation of accounts with similar operations. As there are no domestic laws to draw from, I have taken some guidance from the British and American laws.”

“Under certain circumstances they have allowed consolidation and under some they have even rejected it. So, of the 15 companies, 13 can be consolidated into a single account, having a direct link and interlink of accounts which will maximise their value,” Judge added .

The tribunal also appointed Mahendra Khandelwal as the RP of the consolidated unit.

The other two organizations– Trend Electronics and KAIL –will have separate resolution process, the bench said and explained that these two companies have separate sources of income and after segregation they can survive and get better value.

The resolution process of the consolidated Videocon Group companies and Trend Electronics and KAIL will begin from the day of this order.

Separate RPs will also be appointed for Trend Electronics and KAIL, the tribunal added.

In January, the lenders led by SBI had sought citing procedural consolidation of the 15 Videocon Group saying it will maximise the value of assets and all stakeholders will benefit from such a move, apart from speeding up the resolution process.

The flagship Videocon Industries’ debt stood at ₹19,506 crore as of March 2018. The group is among the 40 largest defaulters identified by the Reserve Bank’s first list for insolvency in late 2016.

The company has its core businesses in consumer electronics and oil & gas exploration, while the subsidiaries are into manufacturing, sale and distribution of consumer goods. The lenders plan to first auction the electronics business estimated to be worth USD 2 billion.

Some of the units referred to the NCLT include Value Industries, Trend Electronics, KAIL, Millennium Appliances, Applicomp, Sky Appliances, Techno Electronics, Century Appliances, PE Electronics, Next Retail, Evans Fraser & Co and Videocon International Electronics.

Published on August 09, 2019
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.