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| Subhiksha arm seeks compromise with lenders |
| TE Narasimhan / Chennai Aug 06, 2009, 00:44 IST |
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Files ‘scheme of agreement’ in the Madras HC
Cash and Carry Wholesale Traders Private Limited (C&C), a subsidiary of cash-strapped Subhiksha Trading Services, has filed a ‘scheme of agreement’ in the Madras High Court under Sections 391 to 394 of the Companies Act.
The company has asked the secured lenders to settle for 50 per cent of the principal amount taken during October 2008. It also said that the “corporate debt restructuring (CDR) process is not comprehensive”.
The petition, filed by N Srinivasan, one of the directors of C&C, said it wanted the secured creditors to accept the payment of the remaining 50 per cent of the principal amounts as a full and final settlement in respect of their dues in so far as their principal amounts are concerned on a pro rata basis. The company said it would start paying in quantum from the end of the third year, from the time the scheme comes into force. It had suggested payments in eight parts over a period of 10 years.
For the unsecured lenders, the retail chain in its petition said the retailer would start repaying the principal amount from January 2011 to December 2011 in full. Besides, the applicant of this scheme or the 'sponsor' will bring in funds to the company as and when required, subject to approval.
The applicant claimed that “Subhiksha’s CDR process is not comprehensive because CDR does not cover even all lender creditors let alone non lenders”.
Of the 13 bank lenders, only six banks — ICICI Bank, HDFC Bank, Federal Bank, Yes Bank, Bank of India and Bank of Baroda — are part of the CDR. Any proposal arrived at and approved by the CDR is only applicable to the six banks and is not binding on the remaining seven banks, which are HSBC, ABN Amro, IndusInd Bank, Barclays Bank, Development Credit Bank, Standard Chartered Bank and Kotak Mahindra.
The application also states that the company cannot survive if the scheme is not sanctioned as it would have a debt burden of around Rs 1,000 crore. According to company’s financial position, which was given in the petition as on March 31, 2008, liabilities and provisions stood at Rs 928.46 crore. The total cash and bank balance stood at Rs 18.03 crore.
Subhiksha’s deadline for CDR expired on July 31, 2009. Sources close to the development said the lenders had asked company’s promoter R Subramanian to bring Rs 350 crore in the CDR.
The petition added that, after discussions with the two major non-promoter shareholders of the company, the banks and the company management have been informed that the non-promoter shareholders are presently unable to contribute additional capital to the company and have left it to the promoters to find the resources. The retail chain had said it would require around Rs 300 crore infusion to restart the business.
When contacted, Subramanian said C&C has its own board. They would decide what they want to say. The said petition has been filed by them in their capacity as a shareholder of our company in compliance with the relevant law and rules and will be decided by the lenders and non lender creditors at the meetings to be convened by the courts.
Based on the discussions with the various stakeholders, the company is confident of resuming business operations within the next 3-4 months, he added.
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