The National Company Law Tribunal (NCLT) has barred State Bank of India from selling oversees oil and gas assets of debt-laden Videocon group outside the ongoing insolvency process.
SBI had advertised to sell the upstream oil and gas assets of Videocon located in Brazil and Indonesia. The bank had taken a view that these assets do not belong to Videocon group and, therefore, the general moratorium applicable to companies under the insolvency process was not relevant in this case. While the NCLT did not rule whether the asset was part of the entity which is under the insolvency process, it said that if SBI is allowed to execute the sale, the Videocon group may suffer an irreparable loss in future if the tribunal takes a view that the asset in question belongs to or owned by the group.
“It is also seen that the legal ownership of these assets vest with the subsidiaries of the corporate debtor (Videocon) and the beneficial ownership vest with the corporate debtor itself. These subsidiaries are Special Purpose Vehicles (SPVs) specifically incorporated by the applicant (Venugopal Dhoot – promoter of Videocon) for holding foreign oil and gas assets for and on behalf of the corporate debtor,” the NCLT said .
Videocon had opposed the sale of the oil and gas assets on grounds that it had set up an SPV for holding these oil and gas business therefore, it has be considered as part of the group assets. SBI had argued that assets of the two overseas subsidiaries are outside the Indian jurisdiction and application of the IBC would run into cross-border law applicability issues.
Bharat Petroleum Corporation Ltd, which is Videocon’s joint venture partner in the SPV, is backing the bank’s position.
Videocon group and its entities owe in excess of ₹85,000 crore to banks, its vendors and even its employees. The company, which is going through the insolvency process, owes its financial creditors that are mostly public sector banks a total of Rs. 57,443 crore. It owes the maximum to SBI– around Rs. 11,175 crore — followed by IDBI Bank at Rs. 9,561 crore.―The Hindu Business Line