Bankruptcy process needs a re-look

A mechanism is needed to ensure bank-led resolution- not the NCLT- is the first resort for lenders

Bankers are finding out that the National Company Law Tribunal (NCLT) is an expensive saloon to visit. The hair-cut on the sale of Videocon to the Vedanta group is 95.85 per cent, that is, banks will recover only 4.15 per cent of their total admitted claims of Rs 64,838 crore. 

Videocon companies will be sold for a price of Rs 2,962 crore. The fair value was assessed at Rs 4,069 crore. Talk of a terrific bargain.

The Videocon offer, the NCLT bench noted, is close to the estimated liquidation value of Rs 2,568 crore. The liquidation value is to be kept confidential