Firms that took part in the earlier bidding are said to have taken up the issue of lack of transparency with State bank of India as many had quoted a lower price. Photo: Hemant Mishra/Mint
Mumbai: State Bank of India (SBI) will invite new bids to select interim resolution professionals (IRP) for Videocon Industries Ltd and Videocon Telecommunications Ltd, three people aware of the development said.
In the last week of December, SBI, the lead lender for both companies, had chosen Alvarez & Marsal, as the IRP. The two companies were in the Reserve Bank of India’s second list of defaulters against whom banks were directed to file insolvency petitions if they couldn’t finalize resolution plans by 31 December.
SBI, India’s largest lender, initiated insolvency proceedings against the two companies earlier this month. The National Company Law Tribunal has not yet admitted the petitions.
“The consultancy firms who participated in the bidding process earlier had taken up the issue of lack of transparency with SBI, as many had quoted a lower price and had more personnel to deploy to undertake the resolution process,” the first of the three persons said on condition of anonymity, as his firm is keen on participating in the next round of bidding.
Questions emailed to SBI were not answered. The bank is in silent period ahead of its quarterly results announcement.
While a company is undergoing resolution, the powers of its board are suspended. The financial creditor who initiates the insolvency resolution process files an application proposing the appointment of an interim resolution professional. This person becomes the interim professional agency if no disciplinary proceedings are pending against him. The IRP must collect financial information about the firm, form a panel of creditors, collate claims from creditors, and manage the company’s operations until the committee of creditors appoints a resolution professional.
An email sent to Alvarez & Marsal did not elicit any response. Videocon Group chairman Venugopal Dhoot said he was not aware of the development.
SBI had invited the bids for selecting the IRP in the last week of December. On 1 January, Business Standard reported that the selection of Alvarez & Marsal had displeased other audit firms who claimed to have submitted lower bids.
According to the second person, SBI has formed an internal committee to address the concerns around the process through which Alvarez & Marsal was selected as IRP. The committee has invited consultancy firms including the “Big Four” to understand their grievances and take suggestions, this person said.
“SBI had set up a panel internally to look into the matter. They called us for questioning as well. Fresh round of bidding will be held but so far, the date has not been notified,” he said.