Court admits winding-up plea against Wockhardt

In a major setback to pharmaceutical company Wockhardt Ltd, the Bombay High Court yesterday admitted a winding-up petition filed by the company’s foreign currency convertible bond (FCCB) holders.

A group of three FCCB holders — or unsecured creditors — led by Singapore-based hedge fund QVT, Sun Pharma and Syndicate Bank, had filed the petition in January 2010. The three hold bonds worth $42 million. Sun Pharma Global alone holds about $20 million in FCCBs, well above the 25 per cent required to compel the bond trustee to act. Sun Pharma’s entry into the legal tussle had made the fight more intense, with some analysts even attributing corporate motives.

The court has given Wockhardt 12 weeks to advertise the winding-up petition if it does not appeal against it. However, the court has given the petitioners a chance to move a separate application for appointing a provisional liquidator

Wockhardt can file an appeal before a division bench in the same court, which will comprise Justice S Wazifdar and Chief Justice Mohit Shah. As the judge had only pronounced the order and not signed it, its copy was not available till the time of going to press.

A lawyer close to the development said, “Wockhardt will challenge the application for appointing a liquidator next week, when the petitioners move the application.”

A Wockhardt spokesperson said, “The company will appeal against the admittance of the winding-up petition.” He refused to say anything further. According to industry sources, it is probably the first time that an Indian court has admitted a winding-up petition from unsecured bond holders and asked the petitioners to appoint a liquidator. Wockhardt had earlier restructured its secured debt in an exercise involving leading Indian banks such as ICICI.

A Sun Pharma spokesperson said, “Together with the trustee and other bond holders, we will aim to follow the appropriate process that will help bond holders receive their dues, as contained in the original terms of the FCCBs.”

Wockhardt had to redeem $110 million worth of FCCBs by October last year. Though it managed to settle with several creditors, it is still left with disputed FCCBs worth about $75 million. In 2009, Wockhardt had announced a programme to recast its over Rs 3,800 crore debt.