A division bench of the National Company Law Tribunal (NCLT) has voiced its surprise over the value arrived in the resolution of 13 Videocon group firms which will now be controlled by Anil Agarwal-led Twin Star Technologies.

On June 8, the NCLT bench comprising Ravikumar Duraisamy and H.P. Chaturvedi approved the resolution plan proposed by Twin Star Technologies. This plan was earlier approved by its committee of creditors (CoC) in December 2020.

Videocon owed its lenders Rs 71,433.75 crore and the NCLT admitted claims of Rs 64,838.63 crore. The resolution plan proposed a payment of Rs 2,962.02 crore, meaning the lenders will lose 95.85 per cent of their dues (haircut).

In its order, the two-judge bench observed that the registered valuers valued the assets of 13 companies which have varied business interests that include oil and gas, consumer electronics, home appliances, digital solutions, real estate, and electronic retail chain.

The liquidation value of these companies was Rs 2,568.13 crore, while the fair value of the assets is Rs 4,069.95 crore.

“Surprisingly the resolution applicant (Twin Star) also valued all the assets and liabilities of all the 13 companies and arrived at almost the same value of the registered valuers,’’ the bench observed.

It pointed out that the regulations under the corporate insolvency resolution process say the liquidation value and fair market value be kept confidential, with the committee of creditors informed only at the time of finalising the plan.

In this case, the liquidation and fair market values were known to the creditor’s panel at their 15th meeting.

“Therefore, even if the confidentiality clause is in existence, in view of the facts and circumstances as discussed above a doubt arises upon the confidentiality clause being in real time use... therefore, we request IBBI (Insolvency and Bankruptcy Board of India) to examine this issue in depth so as to ensure the confidentiality clause is followed unscrupulously...”

“If not, IBBI can frame appropriate regulations, safeguards thereby the maximisation of value of the assets of the corporate debtor(s) would further increase, which in turn will benefit all the stakeholders,’’ the bench said.

On the resolution plan, it observed that the assenting secured financial creditors would get only 4.89 per cent, dissenting secured financial creditors would get only 4.56 per cent and assenting unsecured financial creditors would get only a very meagre amount of 0.62 per cent.

Dissenting unsecured financial creditors would get nil or zero amount and operational creditors would also get a very meagre amount of only 0.72 per cent.

“The successful resolution applicant is paying almost nothing and 99.28 per cent hair cut is provided for operational creditors. During the course of hearing it is also submitted that voluminous number of operational creditors are also MSME and if they are paid only 0.72 per cent of their admitted claim amount, in the near future many of these operational creditors may have to face insolvency proceedings which may be inevitable,” the bench said.

It requested both the CoC and Twin Star to increase the pay-out amount to the operational creditors especially MSMEs.