BOM, SIDBI and IFCI reject resolution, move NCLAT, BFSI News, ET BFSI
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Out of four creditors who have decided to go against the resolution order of NCLT dated June 8, 2021, and appealed in the NCLAT, are bankers.
The dissenting financial creditors are Bank of Maharashtra, SIDBI and IFCI, while the other is ABG Shipyard, which holds O.024%.
The combined shareholding of the four dissenting creditors is around 4%.
“We are against the resolution because the quantum is very low. We do not believe that this is a fair valuation and hence we have appealed in the Appellate Tribunal,” said A S Rajeev, MD & CEO, Bank of Maharashtra.
Following are the percentage share of the creditors who rejected the Videocon Industries resolution plan:
| Creditors | Share Value |
| Bank of Maharashtra | 1.97% |
| SIDBI | 0.053% |
| IFCI | 1.3% |
| ABG Shipyard Ltd | 0.024% |
Videocon valuation
The resolution team of the valuation experts concluded the total dues of Videocon Industries to Rs 4,069 crore. Whereas the liquidation value was Rs 2568.13 crore. The resolution plan of Twin Star Technologies, a company owned by the chairman of Vedanta Group Anil Agarwal, was approved against the actual dues of about Rs 71,000 crore.
“We should not only look at the balance-sheet value but think about the actual receivables as well,” added Rajiv.
Resolution process
There are many cases like Siva Industries, Jet Airways where financial creditors have taken a huge haircut. But among the high profile cases, Videocon Industries resolution is the only case where lenders have taken maximum haircut till date. Even the NCLT in its order observed this and made a sharp comment.
“As per the CoC approved Resolution Plan, Assenting Secured Financial Creditors would get only 4.89%, Dissenting Secured Financial Creditors would get only 4.56%, Assenting Unsecured Financial Creditors would get only very meagre amount of 0.62%. Out of total claim amount of Rs 71,433.75 crores, claims admitted are for Rs 64,838.63 crores and the plan is approved for an amount of only Rs 2,962.02 Crores which is only 4.15% of the total outstanding claim amount and the total hair cut to all the creditors is 95.85%. Therefore, the Successful Resolution Applicant is paying almost nothing and 99.28% hair cut is provided for Operational creditors,” the order said.
The top seven creditors which hold more than 7% of the debt and voted for the resolution in Videocon:
| Creditors | Share Value |
| State Bank of India | 18.05% |
| IDBI Bank | 16.6% |
| Union Bank of India + Corporation Bank + Andhra Bank | 9.7% |
| Central Bank of India | 8.43% |
| Bank of Baroda + Vijaya Bank + Dena Bank | 6.93% |
| ICICI Bank | 5.47% |
| PNB + OBC + UBI | 5.02% |
Liquidation takes over resolution
On one side, the top creditors want to wash away their hands and do not want to carry forward any stress, it’s the smaller lenders who are making some noise. Also, considering the huge loss to financial creditors, industry veterans and experts are criUnion Bank of India + Corporation Bank + Andhra Bankticising the whole resolution process.
Experts have been raising doubts over the whole resolution process.
In an interview with ETBFSI earlier, Siby Antony chairman of the ARC Association of India of said, “IBC is not the right solution. It is a resolution tool. If there is no resolution, automatically it goes to liquidation. That is a big problem. Resolution can be made if the underlying business is robust.”
Also, one of the top corporates Harsh Goenka has said that public money is being looted under resolutions. In the NCLT order itself, the bench has mentioned in the bracket (Hair cut or Tonsure, Total Shave).
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