Bombay HC admits winding-up petition against Wockhardt

In a setback to pharmaceutical firm Wockhardt, the Bombay High Court today admitted a winding-up petition filed against it by the company's foreign currency convertible bond (FCCB) holders.

"Wockhardt owes around Rs 634-crore on bonds that had matured in October 2009. The High Court today has prima facie come to the conclusion that the company has defaulted and is unable to pay the amount," senior counsel Janak Dwarkadas said.

A group of three FCCB holders, led by US-based fund QVT had filed the petition in January last year, seeking recovery of their investments through sale of Wockhardt's assets.

Justice S C Dharmadhikari while admitting the petition has given Wockhardt 12 days to advertise the winding-up petition.

Senior counsels appearing for the company told the court that they would be challenging the order before a division bench.

When contacted, a company spokesperson said: "Wockhardt will appeal against the same."

Debt ridden Wockhardt had undertaken a corporate restructure programme to recast its over Rs 3,700 crore debt in 2009.

Under the Corporate Debt restructuring (CDR) programme, Wockhardt had offered to settle repayment of $110-million FCCB, issued by it in 2004, at a discount.

A group of bond holders led by QVT, which had subscribed to 41% of the FCCB, had refused to take the offer.

Market analyst pointed out that the company will now face a tough legal challenge ahead.

"Wockhardt has now a legal battle to convince the Bombay High Court why its CDR package will work to the benefit of all and hence an order upholding the winding up of the company would not serve the interest of justice," the analyst, KPMG Executive Director Hitesh Gajaria said.

Shares of Wockhardt today closed at Rs 348 on the Bombay Stock Exchange, down 1.76% from its previous close.