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| Take part-payment: Subhiksha to creditors |
| T E Narasimhan / Chennai Aug 06, 2009, 01:40 IST |
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 In its application to the High Court here for a compromise with its creditors, Subhiksha Trading Services has suggested the latter settle for half the principal amount taken from October 2008.
The Chennai-based retail chain ran out of money several months earlier and has suspended operations since then. It had, as reported earlier, after inconclusive negotiations on restructuring its debt, filed a ‘scheme of compromise’ petition as allowed under the Companies Act. It has filed this to the HC through its subsidiary company, Cash and Carry Wholesale Traders Pvt Ltd.
Subhiksha’s founder-promoter, R Subramanian, said he was optimistic of a settlement and early resumption of operations.
The HC petition, filed by N Srinivasan, one of the directors of C&C, said it wanted the secured creditors to accept the payment of 50 per cent of the principal amounts as a full and final settlement in respect of their dues. The company said it would start paying from the end of the third year from the time the scheme comes into force. It had suggested payments in eight instalments over 10 years.
For the unsecured lenders, the petition says Subhiksha would start repaying the principal amount from January 2011 to December 2011, fully.
The corporate debt restructuring (CDR) process for which talks were on till recently “is not comprehensive” because it did not cover all lenders, said the petition.
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 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 the company’s financial position, which was given in the petition as on March 31, 2008, liabilities and provisions were Rs 928.5 crore. The total cash and bank balance stood at Rs 18 crore.
Subhiksha’s deadline for CDR had expired on July 31. Informed sources said the lenders had also asked the company’s promoter, R Subramanian, to contribute 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 of infusion to restart the business.
When asked, Subramanian said C&C has its own board. “They 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.”
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