New Delhi: Troubled retailer Vishal Retail Ltd, which is engaged in a corporate debt restructuring (CDR) exercise with creditors and is in talks to sell a stake to private equity company TPG Capital Lp, has been dealt a setback, with the Delhi high court barring it from selling any assets for the next six months.
The court, hearing a winding-up petition filed by Singapore’s DB300S Bank Ltd, passed an interim order on 11 May restricting Vishal Retail from selling any movable and immovable assets before the next hearing on 25 November.
“Till the next date of hearing, the respondent shall not alienate or otherwise encumber its assets,” the court said in the interim order.
The court order means Vishal Retail will not be able to proceed with the stake sale to TPG for the next six months, said a person familiar with the situation, who didn’t want to be named.“The court order says they cannot touch any asset,” said the person.
Sale scuppered: A file photo of a Vishal Retail outlet in Delhi. Several lenders to the firm, which is seeking to reschedule Rs730 crore of debt, had already cleared a proposal by TPG Capital to take over the retailer. Rajkumar/Mint
The court asked Vishal Retail to file an affidavit providing information on its assets, lists of debtors and creditors, number of employees and the amount outstanding to them, and its audited balance sheets for the last three years.
Sudeep Bhalla, a spokesman for DBS, declined to comment on the court case citing the pending litigation. Vishal Retail’s managing director Ram Chandra Agarwal did not reply to a questionnaire emailed to him on Monday.
Several lenders to Vishal Retail, including State Bank of India, HDFC Bank Ltd and ING Vysya Bank Ltd, are currently working on a CDR exercise with the listed discount retailer. Vishal Retail is seeking to reschedule Rs730 crore of debt. The lenders have already approved a proposal by TPG Capital to take over the New Delhi-based retailer.
Meanwhile, a special district court in Delhi has issued bailable warrants against directors of Vishal Retail, including Agarwal, his wife and his brother, as the company did not respond to a 15 May summons in several bounced-cheque cases filed by DBS, said the same person quoted above.
Dozens of cheques amounting to about Rs13 crore issued by Vishal Retail to DBS were dishonoured as the retailer had instructed banks to stop payment, the person said.
Vishal Retail was hurt by an economic slowdown that started in 2008 and forced many retailers to shut stores, lay off employees and scale down expansion plans as consumers cut down on spending.
The slowdown resulted in several retail ventures folding operations altogether, including Vishal Retail’s peer discount operator Subhiksha Trading Services Ltd and the India master franchisee of US-based My Dollar Store Inc.