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With no significant bids in hand for the acquisition of Videocon Industries under the NCLT-led debt resolution process, lenders will examine a proposal by the company’s promoters to repay about ₹30,000 crore for taking back control of the conglomerate.
Lenders to the company will meet later this month to consider the offer under IBC rules.
“We have given a proposal to the banks under Section 12A of the Insolvency and Bankruptcy Code (IBC) that we are ready to pay the full ₹30,000 crore. This means there will be no haircut to the bank,” a top company official told BusinessLine
Videocon, which is in multiple businesses ranging from oils to consumer durables, was controlled by the Dhoot family before lenders dragged it to the National Company Law Tribunal (NCLT) in 2017. However, the lenders have not received any serious offer so far. For example, a UK-based family office made an offer of just ₹2,200 crore for the company.
The banks will now have to either place the company under liquidation or accept the offer made by the Dhoot family. Section 12A of the IBC, under which the offer has been made, allows the withdrawal of the debt resolution proceedings under NCLT if the majority of the lenders agree to it. Banking sources said the offer made by the Dhoots is under consideration as liquidation may lead to poor debt recovery for the lenders.
Company officials said the offer made by the Dhoots is similar to the debt restructuring plan agreed upon by the joint lending forum of banks in 2017.
Videocon had nearly received the banks’ approval for the plan, but it was rejected by the RBI, which had by then asked banks to refer non-performing assets to the NCLT.
Ruias’ similar attempt
Essar Steel promoters, the Ruia family, had also offered a similar plan but the lenders chose to pick a bid placed by ArcellorMittal. This was after Section 12A of the IBC was introduced, in June 2018. Since then there have been a number of debt resolution cases where lenders have been allowed to withdraw the case from the NCLT.
The intent of Section 12 A is to give the corporate debtor a chance to regain control of the company by making a fresh offer to lenders. As of December 2019, 135 withdrawals have taken place via this Section.
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