ICICI Bank has accused Singapore’s DBS Bank of filing a “false, frivolous and bogus”

RELATED ARTICLES Wockhardt receives USFDA approval for nasal spray

petition in the Bombay high court, calling for the winding up of Wockhardt.

The charge by ICICI Bank, the largest lender to Wockhardt, was made in an application in the high court, seeking to be an intervener in the case in support of the financially beleaguered pharmaceutical company. ICICI Bank has extended rupee as well as foreign currency loans to the company.

DBS Bank, in its petition, said it was aggrieved because it was asked to sacrifice 65 per cent of its dues under a debt- restructuring package worked out by ICICI Bank.

DBS Bank accused the Khorakiwala family, the company’s promoters, of fraudulently enriching themselves in the process of sale of assets in the guise of non-compete fees. The money should have gone to the company instead, the petition said.

Wockhardt has an agreement with Abbott Laboratories to sell its nutrition business for $130 million. DBS Bank said the agreement provides for payment of a non-compete fee to the promoters. “This is nothing but a fraud on the creditors, and for this very act the management of the company needs to be changed,” it said.

ICICI Bank, in its application, said the DBS Bank petition is just a “pressure tactic”. The final hearing in the case is slated for November 27.

Legal firm Juris Corp is representing DBS Bank, while Singhi & Co is representing ICICI Bank. Financial Chronicle contacted lawyers from both the firms involved in the case but they declined to speak on the matter.

The main grouse of DBS and eight other banks is that the restructuring package is “discriminatory and unfair”. They say unsecured lenders like them were deliberately kept out of the discussions that led to the formulation of the final corporate debt restructuring (CDR) package, which asks investors in convertible bonds to take a 65 per cent discount.

ICICI Bank has defended the sale of assets on the ground that the CDR package provides for divestment of the non-core business, which would be monitored by the asset sale committee of lenders. “The sale of the non-core business of the company will fetch a very high value so that the proceeds can be utilised to reduce the company’s debt burden.”

DBS Bank said in the petition that it was surprising that the promoters and shareholders were not required to make any sacrifice, while the creditors were asked to forgo their money. Its petition said, “It is significant to note that the promoters and shareholders of the company do not suffer any loss or make any sacrifice under the said restructuring package, which is unheard of.”

DBS Bank also sought the formation of a committee -- with representatives from the company, the CDR banks and banks with derivatives exposure -- for the sale of Wockhardt’s assets. It said the sale proceeds should be deposited in a “no lien account” until a decision was taken on the manner and pattern of distribution of the proceeds between CDR banks and the derivative banks.