NCLAT Cancels Twin Star Plan and Allows New Round of Bidding

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The National Company Law Appeals Tribunal on Wednesday cleared the creditors committee of Videocon Industries Ltd. to relaunch the tendering process for the insolvent company.

In doing so, NCLAT overturned Twin Star Technologies Ltd.’s resolution plan, which was approved by the CoC and the National Company Law Tribunal, claiming it had certain flaws. In issuing the order, however, the court did not specify the “flaws” of the plan.

Twin Star had offered Rs 2,962 crore to Videocon Industries, which represents 4.15% of accepted claims of Rs 64,938 crore from secured financial lenders. Twin Star is a 100% subsidiary of the British company Volcan Investments Ltd. Volcan is the parent company of Indian listed company Vedanta Ltd. and holds other stakes in the Vedanta Resources group founded by Anil Agarwal.

In June last year, the National Company Law Court approved the plan but said it was surprised that Twin Star’s offer was so close to the liquidation value, which is meant to be confidential.

Soon after, dissenting financial creditors – the Bank of Maharashtra and IDBI – moved the appeal against approval of Twin Star’s plan. They argued that the sale price was very close to the liquidation value. And that the net asset value of the assets was not calculated correctly. On July 19, the appeals court granted a stay of the NCTL order.

Two months later, the CoC approached NCLAT for approval to relaunch the call for tenders process for Videocon group entities in oil and gas, consumer electronics, household appliances, telecommunications and real estate, among others.

India’s Solicitor General Tushar Mehta, representing the CoC, told NCLAT that maximizing the value of the debtor company’s assets is one of the key characteristics of the IBC. And so the committee cannot avoid that.


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