Lenders appeal on Vishal Retail asset sale

Lenders of bankrupt Vishal Retail who are part of the corporate debt restructuring (CDR) effort on its debts are planning to appeal against the High Court order that stops the sale of the company’s assets.

The HC order was in response to a petition filed by DBS Bank, one of the non-CDR lenders, against the company to recover their debt of Rs 40 crore. The next date for hearing is in late November.

The lenders authorised State Bank of India, the main lender, to appoint a senior counsel to defend their interests and get the injunction vacated at the earliest, an executive told Business Standard. “The cost of such legal expenses shall be borne equally by all the lenders,” a banker said.

The CDR package is supposed to be implemented within three months of its approval. But, in light of the November hearing, the implementation of the debt recast is expected to linger on for a while. This will stop Vishal Retail from writing-off any of its debt and getting new investment in the company.

According to analysts, the HC order would put the CDR package in limbo. “The High Court has all the reason not to take cognizance of the CDR and ask for a fresh vote, since the aggrieved party is a non-CDR lender. In terms of value, this would require 75 per cent vote and 51 per cent in numbers, for a final decision,” said Bhavesh Parekh, head, restructuring services, KPMG.

Vishal Retail, too, plans to appeal against the HC order this month. “We will appeal against the order very soon. Even the secured lenders are going to approach the High Court in this matter,” said Chairman Ram Chandra Agarwal.

Other non-CDR lenders — LIC Mutual Fund and Deutsche Mutual Fund — have filed suits against the company, a banker said.

SBI and HSBC bank may also approach the non-CDR lenders which include DBS, Barclays, LIC MF and Deutsche MF and rope them in the restructuring package, where they are given ‘at-par’ treatment with the unsecured lenders, the banker added.