Supreme Court refuses to vacate NCLAT stay on Vedanta takeover bid

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The Supreme Court on Friday refused to vacate the National Company Law Appellate Tribunal’s (NCLAT’s) order that stayed Vedanta Group’s winning bid for the bankrupt Videocon Industries. Without going into the merits of the case, the apex court asked the NCLAT to decide the matter on September 7, the next date of hearing.

A bench led by Justice LN Rao asked Vedanta Group’s arm, Twin Star Technologies, the successful resolution applicant, to go back to NCLAT, which will finally decide the matter on September 7, the scheduled date for hearing. Senior counsel Mukul Rohatgi represented Twin Star in the SC.

The NCLAT had on July 19 stayed Twin Star Technologies winning bid for Videocon Industries on an appeal filed by dissenting creditors, Bank of Maharashtra and IFCI. Both the lenders were unhappy with the value being realised through the resolution plan.

Prior to it, though the Mumbai bench of the National Company Law Tribunal had on June 8 approved the resolution plan of Twin Star Technologies, it had observed that the firm was “paying almost nothing” as the amount offered is only 4.15% of the total outstanding claim. It had noted that the haircut for all the creditors is 95.85% and suggested to both the committee of creditors and the successful applicant to increase the payout.

The NCLT had also asked the Insolvency and Bankruptcy Board of India to see whether confidentiality was maintained during the corporate insolvency resolution process as Twin Star’s bid was very close to the liquidation value, which was meant to be confidential.

In its appeal before the SC, Twin Star Technologies said that while staying the implementation of its time-bound resolution plan, the NCLAT “has blatantly ignored the settled law laid down by the SC in catena of decisions that the commercial wisdom of Committee of Creditors (CoC) in accepting or rejecting the resolution plan (RP) is paramount and that there should be no interference to an approved RP, unless the same contravenes Section 30(2) of the IBC… As apparent, its RP does not contravene any provisions of the Code or its regulations”.

Further, it said that the impugned order does not assign any reasons on prima facie case, irreparable loss and balance of convenience while staying the approval order. It said that the reliance was based solely on a ‘doubt’ of the NCLT of non-compliance of confidentiality clause in respect of liquidation value and fair market value as categorised by NCLT in its approval order.

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