New Delhi: The Madras high court on Friday dismissed a petition filed by a shareholder of Subhiksha Trading Service Ltd that sought a compromise between the beleaguered retailer and its creditors.
“The court thought the compromise will not be a worthwhile one and, therefore, dismissed (the petition),” said Prakash Goklaney, a lawyer representing Subhiksha. “It said the compromise appeal is conditional to a merger and the debts will be discharged by a (proposed) merged entity.”
Goklaney was referring to Subhiksha’s plans to merge with Blue Green Constructions and Investment Ltd, a company that the Chennai-based retailer acquired last year.
Earlier this month, Subhiksha’s shareholder Cash and Carry Wholesale Traders Pvt. Ltd had filed an application under Section 391 of the Companies Act, 1956, to seek a compromise between Subhiksha and its creditors to whom the retailer owes at least Rs750 crore.
R. Subramanian, managing director of Subhiksha, said that Cash and Carry Wholesale plans to appeal against the dismissal once it receives the court’s order.
Cash and Carry Wholesale Traders is indirectly owned by companies promoted by Subramanian.
While dismissing the Cash and Carry Wholesale’s petition, the court also admitted two winding up petitions filed against Subhiksha by Kotak Mahindra Bank Ltd and HCL Infosystems Ltd. Kotak Mahindra is not a part of the bank consortium that is working on a corporate debt restructuring (CDR) scheme to revive the retailer.
Subhiksha owes Rs40 crore to Kotak Mahindra. The bank’s lawyer Karthik Seshadri confirmed the dismissal of Cash and Carry Wholesale’s compromise petition.
Thirteen banks, including ICICI Bank Ltd, HDFC Bank Ltd and Bank of Baroda, have asked for an extension of CDR after they failed to complete the process by its 31 July deadline.
“The company is confident that the order admitting the winding up petitions for hearing by the (Honorable) Court has no bearing whatsoever on its revival plans,” Subramanian said in an emailed press statement.
Once the country’s largest operator of discount supermarkets, Subhiksha earlier this year shuttered its operations of about 1,600 stores after it ran out of money as it failed to raise cash either from the stock market or from banks.
Meanwhile, Subramanian said Subhiksha will continue with its efforts to revive.