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Videocon ruling raises questions for India’s insolvency court

The Insolvency and Bankruptcy Code was supposed to provide swift and meaningful resolution to help get state-owned Indian banks back on their feet. Does a 95% haircut with questions around confidentiality achieve that?

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Anil Agarwal’s Twin Star Technologies will be pay Rs29.62 billion for Videocon Industries

State Bank of India, 18.05%: Voted for.

IDBI Bank, 16.06%: Voted for.

Union Bank of India + Corporation Bank + Andhra Bank, 9.07%: Voted for.

These lines come from a judgment in the National Company Law Tribunal, Mumbai Bench, under India’s Insolvency and Bankruptcy Code, and they refer to the resolution of a failed company called Videocon Industries.

The list goes on through 35 creditors; a few dissent (Bank of Maharashtra, IFCI, a couple more) and most of the tinier creditors abstain.

But, by and large, it’s a resounding 'yes': the top 14 creditors, with more than 95% of the voting share between them, vote in favour.

What have they agreed to? A haircut of more than 95%.

The buyer of Videocon and a clutch of merged businesses within it is Anil Agarwal’s Twin Star Technologies, linked to the Vedanta Group, and he will be paying Rs29.62 billion ($400 million), compared with admitted claims by the creditors of Rs648.38 billion.

And that’s the assenting, secured, financial creditors.


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