The Andhra Pradesh High Court on Friday gave three weeks to Deccan Chronicle Holdings Ltd (DCHL) to respond to IFCI’s winding-up petition filed last month, following the company’s promoters defaulting on a payment of Rs 25 crore.
However, the court did not issue any interim order. IFCI had sought to restrain the promoters from disposing of, or transferring, the company’s assets, pending hearing and final disposal of the petition.
Settlement with IFCI likely
Many say it is likely DCHL’s promoters would reach an understanding with IFCI to withdraw the petition before the three-week period. “The company is already in the process of settling the liabilities due to IFCI. Once it is done, the petition would be withdrawn by informing the court,” said a source close to the development.
In July, IFCI had acquired 250 non-convertible debentures valued at Rs 25 crore from IDFC, which had originally subscribed to the DCHL issue, aggregating Rs 150 crore by way of private placement.
After IFCI refused to extend the redemption period of the NCDs due on July 26 by a month, DCHL’s promoters had, on July 30, paid Rs 2.8 crore as interest on the principal till July 25, and later gave two cheques — one for the remaining interest and another for the principal of Rs 25 crore. However, the cheque for the principal was dishonoured on the grounds of insufficient funds, IFCI said.
It is unclear whether DCHL promoters are trying to repay dues to IFCI alone, or to all NCDs subscribed by IDFC. While it is likely more lenders would file winding-up petitions against the company if it fails to assure them of debt repayment, reports of the company’s total debt estimated at Rs 3,000-4,500 crore cast a cloud over possible exit routes for the promoters.
Meanwhile, the Hyderabad police isn’t hastening the criminal case filed against DCHL promoters by financial services company Karvy, apparently to give the promoters time to settle issues such as repaying Future Capital Holdings (FCHL) loans. Karvy has accused DCHL promoters of cheating, forgery and breach of trust in the transfer of shares on which the promoters had signed a non-disposal agreement with FCHL.