Videocon Group: Why India’s Largest Insolvency Case Is Still In Limbo - EcoFinBiz Blog

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Videocon Group: Why India’s Largest Insolvency Case Is Still In Limbo

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It is one of India’s largest insolvency cases and is also proving to be among the most complex to resolve.

The Venugopal Dhoot-promoted Videocon Group, whose flagship Videocon Industries was part of the first list of firms to be referred for insolvency in June 2017, has seen no progress in resolution, according to bankers and lawyers in the know. The case was admitted for insolvency proceedings 10 months ago and has stretched well beyond the 270-day deadline set under the Insolvency and Bankruptcy Code.

Claims filed against two of the largest Videocon Group companies — Videocon Industries and Videocon Telecommunications — add up to Rs 88,000 crore. However, actual claims may be lower once an overlap of debt facilities between the two entities is weeded out.

Why The Delay?

Resolution has been delayed because lenders want group firms to be consolidated before a resolution plan is worked out, said two people familiar with the case.

While the resolution professional for Videocon Industries had initiated the process for inviting expressions of interest, the process was stalled after lenders approached the Mumbai bench of the National Company Law Tribunal for a stay.

Lenders argued that in many cases these entities took on debt collectively as ‘co-obligors’ and, hence, it would be better to finalise a resolution plan for the group as a whole. A co-obligor is one who is bound with another to fulfill an obligation.

On October 5, 2018, the NCLT had put a stay on the insolvency process till a decision is made on the issue of consolidation. More than six months later, the order is still pending.

Fifteen companies of the Videocon Group, including flagship company Videocon Industries, are currently undergoing individual insolvency processes. While most cases have a different resolution professional, the lenders are common.

The Videocon Group companies under insolvency include Value Industries Ltd, KAIL, Trend Electronics, Applicomp (India) Ltd, Sky Electronics Ltd, Techno Electronics Ltd, Century Appliances Ltd and Evans Fraser & Co (India) Ltd, as per orders available on the NCLT website.

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