New Delhi: Vishal Retail Ltd has filed applications in the Delhi high court to vacate different court orders that bar the troubled firm from selling or transferring its assets.
The company on Monday filed five separate applications in the court for “modification” of its earlier orders so that it can enter into a sale agreement with TPG Capital Lp, said a person close to the situation, who declined to be named.
Difficult phase: A file photo of Vishal mega mart. The retailer’s debt mounted to Rs730 crore and the company was saddled with hundreds of crores worth of inventory due to an economic slowdown in India. Rajkumar / Mint
In May, the court ordered Vishal Retail not to “alienate or otherwise encumber its assets” before the next date of hearing on 25 November in a winding up case filed by Singapore’s DBS Bank Ltd.
Since then, the court has passed similar orders in four other winding up cases filed by other unsecured lenders, including a unit of Deutsche Bank AG, London-based Barclays Bank Plc, Mumbai-based Sicon Ltd.
All of them had filed separate cases over the last several months and Deutsche’s mutual fund Deutsche Trustees Services (India) Pvt. Ltd was the last one to secure a stay from the court on 9 September.
The person cited above said the court stays are proving to be a stumbling block for Vishal Retail from signing the final sell-off deal with TPG, even as the company board has already approved an acquisition by the US-based private equity firm. Vishal Retail spokesman Rahul Grover confirmed by email routed through a public relations agency that the firm has filed applications in the court.
Earlier this month, the board of Vishal Retail approved the selling of the company jointly to Chennai-based Shriram group and TPG Capital for Rs 100 crore. Since Indian laws don’t allow foreign ownership in entities engaged in multi-brand retail, Shriram will own the company’s front-end stores, while TPG will own Vishal Retail’s back-end and wholesale assets, an area where the country allows whollyowned overseas subsidiaries.
Vishal Retail board’s go ahead came after the company’s secured lenders, who are part of a corporate debt restructuring, agreed on a proposal from TPG to acquire the company. The lenders, including State Bank of India, HDFC Bank Ltd, ING Vysya Bank Ltd, have an exposure of around Rs 470 crore out of Vishal Retail’s total debt of Rs 730 crore.
Late last year, these banks agreed to a debt recast of Vishal Retail after the retailer’s debt mounted to Rs 730 crore and the company was saddled with hundreds of crores worth of inventory due to an economic slowdown in India.
An executive at a bank that is part of the debt recast said the court stay is the “major hiccup” before Vishal Retail and TPG seal the final deal and the complete takeover could take months.
“We want it to go through as fast as possible,” the banker said on condition of anonymity. “Any delay would mean loss of money as we want to recover our money as soon as possible.”