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Vishal Retail gets a month to reach settlement deal

Vishal Retail gets a month to reach settlement deal
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First Published: Wed, Dec 08 2010. 11 08 PM IST
Updated: Wed, Dec 08 2010. 11 08 PM IST
New Delhi: Vishal Retail Ltd on Wednesday got a month’s time from the Delhi high court to reach a settlement with unsecured lenders who have filed separate winding-up petitions against the troubled discount retailer.
Neeraj Kaul, the lawyer representing Vishal Retail, sought time from the court to reach a settlement with the creditors, including Singapore’s DBS Bank Ltd, London-based Barclays Bank Plc and Germany’s Deutsche Bank AG. Rupinder Singh Suri, the lawyer appearing on behalf of DBS Bank, said his client had no objection.
Justice P.K. Bhasin gave the parties one month’s time for a settlement and asked them to file a reply by 7 January.
A settlement of the dispute is crucial for Vishal Retail to transfer its assets to US-based private equity firm TPG Capital and the Chennai-based Shriram Group.
The company, whose board in September approved a Rs100 crore sale of assets and transfer of some liabilities to TPG and Shriram, has been barred by court orders from disposing of its assets until it resolves the row, stalling an agreement with the prospective buyers.
Vishal Retail’s main lenders including State Bank of India, HDFC Bank Ltd and ING Vysya Bank Ltd late last year agreed to a corporate debt restructuring (CDR) of the retailer after its debt had ballooned to Rs730 crore.
While the largest chunk of the firm’s total debt is owed to creditors that are part of the CDR, Rs265 crore is owed to the unsecured lenders.
Banks involved in the CDR exercise have given their consent for TPG and Shriram Group to take over the assets of Vishal Retail.
“Everything has been done but some paperwork (remains),” a person close to the proposed deal between Vishal Retail and TPG-Shriram Group said about the prospects of an agreement.
The dispute with unsecured creditors “is not a stumbling block, as far as I can tell,” the person said on condition of anonymity. “It is a delay, I would think.”
In May, the Delhi court stayed Vishal Retail from selling its assets until 25 November, the next date of hearing.
However, on 25 November, Justice Sanjiv Khanna expressed his inability to hear the case citing personal reasons.
Vishal Retail told the Bombay Stock Exchange last month that it was exploring ways to reach a settlement with its unsecured lenders.
A deal with TPG Capital and Shriram Group would be on a so-called slump sale basis that would involve the transfer of its business to the buyers for a lump-sum consideration, without assigning values to individual assets and liabilities.
It wouldn’t involve the transfer of shares in the company.
Vishal Retail became a victim of the 2008-09 economic slowdown that left organized retailers laden with heavy debt and inventory as sales shrank. (Divya Guha contributed to this story.)
rasul.b@livemint.com
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First Published: Wed, Dec 08 2010. 11 08 PM IST