Subhiksha lenders for fresh debt recast

The retailer’s CDR deadline lapsed on July 31.

The lenders to the beleaguered retailer, Subhiksha, said they have to rework the debt recast proposals, as the corporate debt restructuring (CDR) deadline had lapsed on July 31. ICICI Bank, lead lender to the Chennai-based chain, is expected to rework the proposal and present it to the CDR cell for further processing, sources said. The sources said ICICI Bank could get the reworked proposal back to the CDR cell, which is meant for expeditious debt recast, within the next 15-20 days.

The delay was on account of non-finalisation of accounts and court cases initiated by some of the lenders.

The books were referred for a special audit in February 2009, when the case was referred to the CDR cell.

In fact, Subhiksha was the first retailer to be referred to the corporate debt restructuring cell, comprising 12 lenders, early this year.

One of the lenders, Kotak Mahindra Bank, to which Subhiksha owes Rs 40 crore, opted out of the CDR process.

Though the banks are, in principle, favourable towards a moratorium/restructuring of Subhiksha’s total debt of around Rs 800 crore, they want to appoint an advisory board to keep a close tab on the company’s operations and a chief financial officer (CFO) to manage the finances, besides setting up a corporate governance committee.

It, however, depends on the speed with which the special audit is completed. In the absence of accounts, it is difficult to take a decision on the extent of losses and assistance.

In January this year, Subhiksha approached the banks, which have collectively lent the retailer over Rs 750 crore, to restructure its debt, citing falling demand as a reason for its inability to follow the original repayment schedule.