InvestorQ : Why is Dhoot trying to buy back Videocon at a discount? If he had funds why did he not repay the loans to the banks?
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Why is Dhoot trying to buy back Videocon at a discount? If he had funds why did he not repay the loans to the banks?

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Deepa Salunkhe answered.
7 months ago
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That is a valid question about the loans but that is what the Dhoot family is trying to do now. Dhoot family has offered Rs.30,000 crore as a full and final settlement to lenders to settle their outstanding loans and pull all 13 Videocon companies from the NCLT.

The proposal has been sent to the Committee of Creditors but in the past the COC has not been too encouraging of such moves as it entails the promoter retaining control after negotiating a hefty haircut to the banks. That defeats the very purpose of NCLT proceedings.

It may be recollected that Videocon’s board was suspended following initiation of the Corporate Insolvency Resolution Process or CIRP at the NCLT. While the Dhoots are keen on such a settlement, it may set a bad precedent and the banks may be averse to it.

Currently, the extant NCLT rules allow the tribunal to permit withdrawal of an ongoing insolvency process against a company subject to certain conditions. Whether this case will satisfy that condition is not clear at this point of time?

Normally, this Section 12A is easily applied in smaller cases. However, Videocon is one of the largest bankruptcy cases and in the case of Essar the COC had stopped the existing promoters from participating in the process either directly or indirectly.

With the opportunities opening up in the form of outsourcing, clearly Videocon sees a huge potential to make a difference. He would not want to lose out on the cream of the business at this point of time and that could be the reason.

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