The National Company Law Tribunal (NCLT) has ordered the inclusion of Videocon’s oil businesses in Brazil and Indonesia as part of insolvency proceedings being conducted in India, which is the first instance of overseas incorporated subsidiaries being brought under the ambit of local insolvency laws.
The assets include stakes in overseas oil blocks held through Videocon arms incorporated in the Cayman Islands and British Virgin Islands. These were purchased after Videocon entered an agreement with state-run Bharat Petroleum Corporation Ltd 14 years ago to search for foreign investment opportunities jointly. The two partners reportedly invested over $2 billion in development of the assets over the past six to eight years.
Videocon, an Indian-incorporated entity argued that loans taken by overseas subsidiaries were guaranteed by it, making the parent company the ultimate beneficial owner of those assets. Videocon and its promoter Venugopal Dhoot also claimed at NCLT that this was reason enough for them to be included in the local proceedings