Why is NCLT unhappy with the Vedanta / Videocon deal?

Broadly, the NCLT Mumbai Bench has two problems with the NCLT deal between Vedanta promoters and Videocon. Firstly, the NCLT has questioned the decision of the COC and valuers of Videocon to allow creditors 96% haircut on their loans. That is as good as a write-off. Ironically, the registered valuers have pegged the worth of net assets of the 13 group companies of Videocon at fair value of Rs.4,069 crore.

Apart from the ridiculously low fair value estimate, even the liquidation value has been set at Rs.2,568 crore and Vedanta is offering an awfully low Rs.2,962 crore against admitted claims of Rs.64,838 crore. While financial creditors are taking 96% haircut, even operational creditors are almost writing off their dues in entirety. NCLT has called for increasing the pay-out to operational creditors of Videocon group.