NCLT permits foreign assets of subsidiaries of corporate debtor to be included in CIRP/IM
February 12, 2020
Venugopal Dhoot (Applicant), in the matter between State Bank of India and Videocon Industries Limited (VIL) & Ors.
The NCLT has held that the foreign oil and gas assets of Videocon Industries Ltd (VIL)/Corporate Debtor (CD) should be included in the assets of VIL for the purpose of its CIRP and section 14 of the I&B Code will apply to such assets held by or through its subsidiaries. The foreign assets cannot be treated separately only for the benefit of the financial creditors – balancing the interest of all stakeholders, maximisation of value of assets and keeping the CD a going concern could be achieved only by including such assets. The NCLT allowed the application of Mr.Venugopal Dhoot, who is the guarantor, shareholder, former MD of VIL (parent Company of Videocon Group of Companies). It rejected the SBI’s argument, amongst others, that the assets were not shown in the Balance Sheet of VIL and held that the acquisition agreements and financing agreements indicate VIL as the joint owner/purchaser and in the absence of a legal transfer of rights, interest and ownership of the assets at market value the subsidiaries/SPVs would not become the owners of these assets to the exclusion of VIL. Further, the obligations of VIL and the subsidiaries were intermingled and they were being treated as one single economic entity irrespective of the change of holding structure from time to time.
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