HC dismisses wholesaler's plea on Subhiksha debts

The Madras high court on Friday dismissed a petition filed by a shareholder of the troubled retail chain Subhiksha Trading Services Ltd that sought a compromise between the Subhiksha and its creditors.

Earlier this month, Cash and Carry Wholesale Traders Pvt Ltd, a shareholder of Subhiksha, had filed an application seeking a compromise between the retailer and its creditors, to whom the Subhiksha owes at least Rs750 crore.

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. The court told Kotak Bank to publish an advertisement seeking anybody's objection for winding up the retail chain.

Kotak Mahindra is not a part of the bank consortium that is working on a corporate debt-restructuring (CDR) scheme to revive the retailer. However, Subhiksha owes it Rs40 crore. 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.

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.

According to the company's financial position as given in the petition, as of 31 March 2008, its liabilities and provisions stood at Rs928.46 crore, while its cash and bank balance was a mere Rs18.03 crore.