Infotel Business Solutions, the parent company of Infotel Broadband, which was sold to Reliance Industries Ltd in 2010, has objected to the consolidation of insolvency proceedings of Videocon group at the National Company Law Tribunal (NCLT).
Infotel has argued that the proposed consolidation of insolvency proceedings of 14 Videocon group companies will adversely impact its rights as a creditor of one of the group companies where it accounts for 40% of total dues and to a similar percentage of voting rights as a member of the committee of creditors (CoC). “When the debt of all 14 companies gets consolidated, our voting rights in the CoC will fall to 2 percent because our share in the consolidated debt will fall proportionately,” a spokesperson for Infotel Business Solutions told ET.
Infotel Business Solutions is a creditor of KAIL Ltd, one of the Videocon group companies that stood guarantor for loans worth Rs 20,000 crore taken from a consortium of banks by Videocon Industries Ltd, the group’s flagship. KAIL is also a key company in the insolvency process as it houses the Videocon brand, according to sources in the know.
Delhi-based businessman, Mahendra Nahata, is a major shareholder of Infotel Business Solutions. Nahata had bid for 4G spectrum in 2010 through his company Infotel Broadband, which he subsequently sold to Reliance Industries. The company has morphed into present-day Reliance Jio.
Videocon’s biggest creditor, State Bank of India, has moved an application at the NCLT to consolidate the insolvency proceedings of 14 Videocon group companies under one bench and has proposed that a common resolution professional be appointed to oversee the auction process for all the companies.
The state-run bank has also proposed that a common resolution plan be submitted by prospective bidders for all the companies, to ensure that the creditors are able to maximize value from the sale of the business as the companies have interlinked operations.
The NCLT is yet to rule on SBI’s plea. “India is still working on a regime for group restructuring,” said Ashwin Bishnoi, partner at law firm Khaitan & Co. “Till the time it develops, creditors are entitled to argue that their rights could be compromised by such actions.” Videocon Industries was admitted for insolvency proceedings in June last year while several of its associate companies were admitted in the subsequent months. Five resolution professionals— KPMG’s Anuj Jain, PwC’s Mahendra Khandelwal, Divyesh Desai, Dushyant Dave and Avil Menezes— are currently tasked with overseeing the insolvency process for the various companies.
SBI recently invited fresh proposals to appoint a single resolution professional for all the Videocon companies admitted for insolvency proceedings in anticipation of a favorable order from the NCLT. An SBI spokesperson said in response to ET’s queries, “It is a policy of the bank not to comment upon individual accounts and its treatment”.―IBC Guide