38.6c New Delhi, India, Thursday, March 28, 2024
Judiciary

Relief To Videocon: NCLT Approves Founder’s Plea To Stop Lenders From Selling It's Overseas Assets

By LawStreet News Network      13 February, 2020 10:02 PM      0 Comments
Videocon National Company Law Tribunal

The National Company Law Tribunal granted Venugopal Dhoot's request for a moratorium on the international petroleum assets of the debt-ridden Videocon Group and barred its lenders from selling the conglomerate's overseas assets. 

Dhoot, founder of the Videocon Group, also sought direction from the court to declare the properties of the overseas petroleum subsidiary of the group to be the property of Videocon Industries Ltd. 

Dhoot's request to merge the overseas oil and gas properties with the rest of the Videocon Group's assets was approved by a two-member tribunal consisting of the judicial member, Suchitra Kanuparthi, and technical member, Chandrabhan Singh.

The tribunal observed that Videocon Group entities would be forced into liquidation if the consolidation of the oil and gas assets isn’t allowed. “Foreign oil and gas assets cannot be treated separately only for benefit of Financial creditors,” it said in its order.

This is the outcome of the invitation by State Bank of India in August 2019 to tender for the Group's overseas assets, which were provided as collateral for loans to Videocon entities. The proposed sale was beyond the insolvency proceedings of Videocon Group entities and the lenders, including SBI, had objected to Dhoot's plea.

Section 38 of Insolvency and Bankruptcy Code,2016 (IBC) allows for consolidation of claims in the insolvency process. 

Mr. Venugopal has asked for a period to delay the payment of money so as to restrain the lenders from selling the conglomerate’s overseas assets. Moratorium has been defined in Section 14 of IBC. 

Dhoot opposed the sale on the ground that it belonged to the overseas subsidiaries of Videocon Industries, which were set up as special purpose companies to serve as trustees and retain the properties on behalf of the Indian company. In 2007, Videocon Industries jointly applied for acquisition and expanded payments for acquisition of overseas assets. 

Lenders opposed Dhoot's appeal, citing that the foreign subsidiaries were owners of oil and gas properties. They said that Videocon Industries had no rights to properties. SBI argued that the extension of the moratorium on overseas assets could delay the recovery of money from the selling of assets.

The Court investigated the chronology of the loan agreements between the lenders and the Videocon Group entities. As per order, the companies of the Videocon Group have been divided into three segments — consumer home appliances, telecommunications, and overseas oil and gas sector.

Thirteen Videocon Group organizations, including the flagship Videocon Industries Ltd., are part of the category of consumer home appliances. They were funded by the lenders’ Rupee Term Loan Agreement, including SBI, under the obligor / co-obligor scheme.

In August 2019, the NCLT allowed the restructuring of the insolvency process for 13 Videocon Group entities on the basis of factors such as the commonality of debt repayment obligations, management, assets and liabilities and the interlacing of the financial structure between Videocon entities. 

Videocon Industries retained control over the decisions of its foreign subsidiaries through the board of directors held by the Dhoot family, suggesting that they operated as agents of the Indian company. Lenders viewed Indian and foreign companies as a single economic entity when granting loans to Videocon Group's three business segments.

Videocon Industries continued to hold rights and security interests in foreign subsidiaries. Oil and gas reserves have been funded against protection on the holdings of Videocon Industries. There was a pooling of human resources and support between the agencies.

All Videocon Group entities had common borrowers, who viewed them as a single economic business unit to expand loans.

 

Author: Harneet Singh



Share this article:

User Avatar
About:


Leave a feedback about this
TRENDING NEWS

sc-declines-to-reconsider-judgement-holding-conspiracy-to-be-scheduled-offence-under-pmla-only-if-offence-specifically-mentioned
Trending Judiciary
SC declines to reconsider judgement holding conspiracy to be scheduled offence under PMLA only if offence specifically mentioned [Read Order]

Supreme Court declines review, confirms conspiracy must relate to a scheduled offence under PMLA, dismissing appeal on money laundering charges.

27 March, 2024 07:40 PM
arvind-kejriwals-plea-for-interim-release-rejected-by-delhi-high-court
Trending Judiciary
Arvind Kejriwal's plea for interim release rejected by Delhi High Court [Read Order]

Delhi High Court rejects Arvind Kejriwal's plea for interim release in money laundering case related to liquor policy scam, pending ED's response.

28 March, 2024 10:50 AM

TOP STORIES

global-entertainment-giants-warner-bros-netflix-amazon-get-relief-from-delhi-hc-in-copyright-protection-case
Trending Business
Global entertainment giants Warner Bros, Netflix, Amazon get relief from Delhi HC in copyright protection case

Delhi HC grants relief to global entertainment giants like Netflix, Amazon, Warner Bros, ordering takedown of copyrighted content on rogue websites.

22 March, 2024 12:13 PM
arvind-kejriwal-arrested-can-cm-administer-a-region-while-being-in-jail
Trending Top Stories
Arvind Kejriwal Arrested | Can CM administer a region while being in jail?

Will President's rule be imposed in Delhi after Kejriwal’s arrest? Read the full article to know more.

22 March, 2024 03:16 PM
merely-because-you-are-politician-cant-bypass-statutory-remedies-procedure-sc-refuses-to-consider-bail-by-kavitha
Trending Judiciary
'Merely because you are politician, can't bypass statutory remedies, procedure,' SC refuses to consider bail by Kavitha

Supreme Court denies bail to politician Kavitha in Delhi Liquor Policy Scam; ED alleges Rs 100 crore illegal gratification.

22 March, 2024 03:34 PM
ponmudi-to-be-sworn-in-as-minister-tn-governor-relents-before-sc
Trending Judiciary
Ponmudi to be sworn in as Minister, TN Governor relents before SC

Tamil Nadu Governor relents to Supreme Court's order, agrees to swear in DMK leader K Ponmudi as Minister after court's rap.

22 March, 2024 03:54 PM

ADVERTISEMENT


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email