The Economic Times daily newspaper is available online now.

    Lenders may drag Videocon arms to bankruptcy court

    Synopsis

    At a closed-door meeting, the heads of large commercial banks discussed ways of recovering dues from the oil venture.

    ​VideoconThinkStock Photos
    Videocon’s lenders have an exposure of over Rs 20,000 crore, of which SBI’s dues amount to Rs 3,900 crore.
    MUMBAI: Lenders led by the State Bank of India may take the step-down subsidiaries of Videocon Industries to bankruptcy court in order to arrive at a comprehensive resolution plan, said people aware of the matter. They will also explore ways of asserting their rights over assets of such overseas units, which include interests in oil and gas, that are outside the purview of the bankruptcy court.

    SBI had initiated insolvency proceedings against Videocon Industries at the National Company Law Tribunal (NCLT), which hasn’t admitted the case yet after the company sought more time on the ground that it did not get adequate notice from lenders. It will hear Videocon’s plea on January 24.

    Videocon Industries is among a list of 28 companies that the Reserve Bank of India directed banks to refer to bankruptcy court if a debt resolution plan couldn’t be agreed by the end of December 2017. Videocon’s lenders have an exposure of over Rs 20,000 crore, of which SBI’s dues amount to Rs 3,900 crore.

    At a closed-door meeting, the heads of large commercial banks discussed ways of recovering dues from the oil venture. Since it’s based overseas, banks cannot assert their rights over it under the Insolvency and Bankruptcy Code (IBC). The law allows banks to refer defaulting companies to bankruptcy court and resolve the debt in 270 days or liquidate assets to recover dues. “Videocon Oil ventures is a gold mine, particularly now, considering the rise in oil prices,” said a banker aware of the meeting. “The investment in the Videocon oil venture will reach breakeven if oil prices cross $55 a barrel.” Oil prices have surged in recent times to $70 per barrel.

    In 2015, Videocon Industries entered into an alliance with a Bharat Petroleum Corp. unit to form a joint venture called IBV Brasil Petroleo to manage oil assets in Brazil. Videocon and the BPCL unit hold a 20% stake each, while Brazil’s Petrobras hold the remaining 60%. “Lenders discussed possibility of approaching the government with a suggestion that BPCL could acquire a higher stake in this venture and the funds used to repay loans of banks,” said a banker present at the meeting.

    The step-down subsidiaries of Videocon Industries are engaged in activities such as manufacturing, sale and distribution of consumer goods. Some of the units that may be referred to NCLT include Value Industries, Trend Electronics Ltd, KAIL Ltd, Millennium Appliances India, Applicomp (India), Sky Appliances, Techno Electronics, Century Appliances, PE Electronics, Next Retail India, Evans Fraser and Co. (India) and Videocon International Electronics, said the people cited above.



    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in