Subhiksha to seek stay on winding-up petitions next week

Subhiksha to seek stay on winding-up petitions next week
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First Published: Fri, Jul 10 2009. 09 18 PM IST
Updated: Fri, Jul 10 2009. 09 18 PM IST
Defunct discount retailer Subhiksha Trading Services Ltd plans to ask the Madras high court next week, to temporarily put on hold many of the winding-up petitions filed against it. The firm will argue that all hearings on winding-up petitions should be postponed till its corporate debt restructuring (CDR) process, which is currently under way, is over, said one of the lawyers representing the company.
Subhiksha is expected to file a submission in the court early next week saying that the companies which have filed winding-up petitions against it account for a mere 4% of the total debt against the retailer, whereas creditors that account for 96% of the debt owed by the company were working on the CDR to help the company get back on its feet.
Subhiksha shuttered its 1,600 outlets in January after the company said it ran out of cash and was unable to support its operations.
A consortium of around a dozen banks is currently working on the CDR proposal that is expected to be completed by the end of this month.
“I am going to argue that it (the winding-up petitions) need not be admitted and the CDR process is on...and the last date (for finalizing the CDR) is 31 July and let it hang on...until the month end,” said Prakash Goklaney, one of Subhiksha’s lawyers. “The CDR process is on and is almost in the last stages and, therefore, any order passed (on the winding-up petitions) will affect the CDR process.”
At least three winding-up petitions have been filed against the retailer by companies that are owed money by the retail firm. Two of these are HCL Infosystems Ltd and Kotak Mahindra Bank Ltd.
A representative of one of these creditors said his client will contest in the court any such effort from Subhiksha.
“We will take it as it comes,” said Karthik Seshadri, the lawyer representing Kotak Mahindra Bank.
The Subhiksha lawyer, however, said the court should take cognizance of the fact that the winding-up petitioners constitute only 4% of the Rs800 crore debt against the company. “Ninety-six per cent of the secured creditors are taking part in the CDR and are amenable to it,” he said. “The 96% is not going against us and just for the sake of 4%, other 96% should not be affected.”
“There is a big difference between not wanting to pay and being unable to pay,” said Subhiksha’s lawyer Goklaney. “We are unable to pay.”
Once one of the fastest growing organized retail chains in the country, Subhiksha succumbed under the pressure of its large network of around 1,600 stores as the company’s precarious cash situation made it difficult to sustain its nationwide business. Currently, Subhiksha is seeking Rs300 crore from its lenders and investors to bring its operations back on track.
rasul.b@livemint.com
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First Published: Fri, Jul 10 2009. 09 18 PM IST