12 June 2019: American Tower Corporation, one of the operational creditors to Videocon Group, moved the National Company Law Tribunal opposing the lenders’ proposal to consolidate the bankruptcy proceedings of 15 entities promoted by Venugopal Dhoot.
The debtors of each group company are different, and ATC has exposure only in Videocon Telecommunications Ltd. So, consolidation of all accounts will lower ATC’s claims as an operational creditor in the total pool, its counsel argued. Also, the bankruptcy code doesn’t provide for a group insolvency framework as proposed by the joint lenders’ forum, he said.
To this, the counsel for lenders said they are finding it difficult to get potential investors for standalone entities despite several attempts, and sale of all group companies on a consolidated basis would be more beneficial. Opposing ATC’s submission that the tribunal has no inherent power to allow consolidation, the lenders’ counsel said Rule 11 allows the NCLT to pass an order to allow the proposed consolidation by the lenders.
State Bank of India had filed the insolvency petition against Videocon Industries Ltd.—the flagship company of the Dhoot-promoted group—in December 2017. It was admitted by the NCLT in June 2018. Bankruptcy proceeding were also initiated against 15 group companies. After that the lenders moved the NCLT seeking a direction to consolidate the 15 group entities as they are engaged in common businesses. The NCLT in October stayed the insolvency process till a decision is made on the issue of consolidation. More than nine months have passed since then, but the decision is still pending. The case has stretched well beyond the 270-day deadline under the Insolvency and Bankruptcy Code.
ATC’s application is one of the several pleas filed by operational creditors to oppose the proposed consolidation. After hearing both the parties, the single-judge bench of the NCLT—presided over by MK Shrawat—said the tribunal will deal with all applications in a single order which has been reserved.
In a separate application, Panasonic sought release of its moulds and equipment held by Videocon Industries as trustees. The NCLT directed the resolution professional of Videocon to file a reply by June 29. This matter will be heard on July 8.