Complicating things further for media house Deccan Chronicle Holdings, IFCI has sought the appointment of a liquidator for the company’s assets.
In a petition filed in the Andhra Pradesh High Court, the public financial institution has expressed complete scepticism over the financial health of Deccan Chronicle and sought the winding up of the company to recover its dues.
In 2011, Deccan Chronicle had issued non-convertible debentures (NCDs) through IDBI, and IFCI had invested about Rs25 crore through 250 NCDs. The NCDs were to mature on June 26 this year and carried a coupon of 11.25%.
According to IFCI’s application in the court, Deccan Chronicle failed to make the repayment of the redemption amount of Rs27.80 crore, resulting in a default.
IFCI claimed that T Venkattram Reddy, chairman of Deccan Chronicle, had later submitted an undertaking seeking to clear the dues by July 4. Accordingly, the company had arranged Rs2.8 crore towards interest at 11.25% on the principal amount of the NCDs of Rs25 crore through real time gross settlement, or RTGS, in addition to two cheques drawn on ICICI Bank, covering the balance amount. However, while one of the cheques was honoured, the other was dishonoured on the ground of “insufficient funds” by the bank.
Aggrieved with the non-compliance with the undertaking given by the chairman, IFCI has moved the high court seeking winding up of the company. “The petitioner (IFCI) understands that in addition to the Rs150 crore liability to subscribers of the NCDs, the respondent (Deccan Chronicle) has huge debts to various banks, financial institutions, NBFCs, etc running into thousands of crores of rupees. The petitioner understands that the respondent has defaulted in respect of many other liabilities and apprehends many more winding up petitions may be filed by other creditors,” it said.
IFCI cited a recent order by the Royal Courts of Justice, London in favour of Tim Wright, former chief executive of Deccan Chargers, the Indian Premier League cricket team owned by Deccan Chronicle, asking the company to pay about Rs90 crore towards the breach of employment contract.
“The petitioner also understands that there are other contingent liabilities, which may also turn actual liabilities in coming days. The petitioner therefore apprehends that such liabilities may lead to the erosion of the entire networth of the respondent and ultimately make the respondent commercially unviable and insolvent,” IFCI noted.
The winding up petition is pending further hearing by the high court.