Debt Recovery Tribunal to auction Deccan Chronicle promoters’ private jet

C R Sukumar, ET Bureau | 30 Sep, 2014, 08.13PM IST 

HYDERABAD: In an embarrassment to the promoters of ailing media house Deccan Chronicle Holdings(DCHL), theDebt Recovery Tribunal (DRT) has decided to auction the eight-seater corporate jet in which the media house owners toured around the world for years. 

The move comes months after ICICI Bank, one of the key lenders of the media house, approaching the DRT accusing the DCHL promoters of defaulting on loans of some Rs 500 crore. 

The Hawker 400 is a twin-engine jet corporate aircraft, which was imported from the US based Raython Aircraft Company in 2007. 

During April last year, ICICI Bankhad moved a local court in Hyderabad against the Deccan Chronicle promoters after a cheque issued for Rs 350 crore by them bounced. ICICI was among dozen odd lenders that dragged the DCHL promoters to various courts involving defaults and cheque bounces. 

"DRT has ordered auctioning the corporate jet of Deccan Chronicle on June 2 and we have accordingly sought bids from interested parties through e-auction process," the tribunal appointed advocate commissioner K. Buchi Babu told ET. 

Babu said the reserve price was kept at Rs 9.75 crore and the bidders were asked to ensure an earnest money deposit of Rs 1 crore to participate in the e-auction, which is scheduled to take place on October 17. The said aircraft is currently at New Delhi's India Gandhi International Airport and the interested registered bidders would be permitted to inspect the aircraft prior to the auction on October 9. 

The publisher of English dailies Deccan Chronicle, Financial Chronicle and Asian Age and Telugu daily and weekly Andhra Bhoomi has been in news since July 2012 when its financial woes came to the fore. More than a dozen lenders, both public and private, knocked on the doors of various courts across the country and DRT seeking to recover their debts running into nearly Rs 4,000 crore. 

DCHL's lenders include host of financial institutions such as Canara Bank, Corporation Bank, Indian Overseas Bank, Central Bank of India, Andhra Bank, Jammu & Kashmir Bank, IFCI, LIC, Axis Bank ICICI Bank, HDFC Bank, Future Capital, Religare Finvest, Kotak Mahindra Bank Tata Capital Ltd, PVP Capital Ltd, National Pension System Trust and Yes Bank Ltd, among others. 

Following the plea by one of the lenders, Canara Bank, which suspected an accounting fraud, the country's premier investigating body Central Bureau of Investigation last year initiated a probe into DCHL books and registered cases against the company and promoters. 

Several lenders have also moved against each other claiming rights over the assets mortgaged by the DCHL promoters including titles and trademarks of Deccan Chronicle, Asian Age, Financial Chronicle and Andhra Bhoomi. Some lenders even exercised the option over the assets charged to them and took possession of them after the company and promoters failed to clear their dues. 

Deccan Chronicle Holdings Ltd gets relief from Madras HC

 

BS Reporter  |  Chennai  

December 31, 2013 Last Updated at 20:48 IST

The Debt Recovery Tribunal was in favour of Canara Bank in auctioning the company's property to realise around Rs 360 cr

The Madras High Court has directed Deccan Chronicle Holdings Ltd (DCHL) to approach the appropriate forum against the order of the Debt Recovery Tribunal II, which was in favour of Canara Bank auctioning the company’s property to realise around Rs 360-crore.

The high court, which dismissed the writ petition of DCHL, has ordered to maintain status quo to not  sell the media group’s assets for eight weeks.

The petition was filed by DCHL challenging an order passed on September 26, 2013, by the Debts Recovery Tribunal II, Chennai, which was in favour of Canara Bank, which has initiated procedures to auction the company’s various assets under the the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002. The appropriate forum for DCHL to approach is the Debt Recovery Appellate Tribunal, according to legal sources.

An email sent to a DCHL official did not elicit any response till the time of going to press.

The bench comprising of Justice M Jaichandren and JusticeK Kalyanasundaram, in the order issued on December 16, 2013, said, “...the petitioner is permitted to move the appropriate forum, provided under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,  within a period of eight weeks from today, failing which it would be open to the First respondent (The Authorised Officer of Canara Bank) bank to proceed further, as per the relevant provisions of law, including the provisions contained in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.”

If the petitioner approaches the appropriate forum in time, as specified in the order, the appropriate forum shall entertain such matter, on merits and in accordance with law and dispose of the same, without raising the issue of delay, in the filing of the matter, it added.

“We also make it clear that the petitioner, including the First respondent bank, shall maintain status quo, for a period of eight weeks from today,” said the order.

The court also stated that even though various grounds have been raised on behalf of the petitioner, the Court is of the considered view that the petitioner ought to make its claims, relating to the issues arising for the consideration of the Court, in the present Writ Petition, before the appropriate forum, as provided under the SARFAESI Act, 2002.  We make it clear that it would be open to the petitioner to raise all the grounds available to it, before the appropriate forum, as per law.

According to earlier reports, DCHL owes around Rs 358 crore to Canara Bank, for which the lender has taken legal action. It has earlier issued an advertisement in the news papers seeking bidders for DCHL's property in Chennai, along with machinery in Tamil Nadu and Andhra Pradesh.

The Bank has also filed a complaint with the Central Bureau of Investigation to investigate  the alleged irregularities in the DCHL balance sheet along with various related issues.

Deccan Chronicle :Police start probe in disrupted DCHL property auction

BS Reporter  |  Hyderabad  

December 27, 2013 Last Updated at 00:50 IST

Case registered against Indiabulls' official for an alleged false promise of lower price to a bidder

The city police on Thursday said they had begun a probe into the alleged disruption of a Deccan Chronicle Holdings Limited (DCHL) property auction at the office of Indiabulls Housing Finance here on Tuesday.  They would also look into a complaint filed by a prospective bidder in a related matter against two officials of Indiabulls.

The  police registered a case against Somajiguda municipal councillor A Mahesh Yadav and eight others for disrupting the auction of the residential property of P K Iyer, a promoter of DCHL, based on a complaint by Indiabulls’ legal manager K V Subbayya.

They also registered a case against Subbayya and his colleague based on a complaint by Chalapathi, who, according to police, alleged the duo had cheated him after taking money to help get the property at a cheaper price.

West Zone DCP V Satyanarayana said they had initiated the investigation and added they needed to question Indiabulls’ top officials to get a clear picture.

“We readily provided adequate police security to the Indiabulls’ team when they went to take possession of the said property in July this year. I do not understand why they did not seek similar protection this time,” he told Business Standard on Thursday.

The police are not only looking into the motive behind the alleged action of Mahesh Yadav but also trying to find if there was any link between him and Chalapathi, who had approached the police against Indiabulls’ officers soon after the company representatives filed a complaint against the corporator .

According to Satyanarayana, the complainant alleged Subbayya and his colleague received Rs 5 lakh as an advance to help him get the property at a cheaper price but later betrayed him by enhancing the reserve price to Rs 14 crore from the earlier figure of Rs 6 crore. Subbayya refused to comment on the issue.

Indiabulls took possession of two residential properties, including this one, of DCHL promoters after invoking the Sarfaesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) when they failed to repay the Rs 100 crore it lent.  

An attempt to seek relief under the sick companies Act by the DCHL promoters has failed, as the Board for Industrial and Financial Reconstruction (BIFR) declined to register the company as sick one.

“Although the company is in the business of newspaper, it had filed the reference showing its business to be that of printing which was completely misleading and factually incorrect,” an order issued by the BIFR registrar said.

Referring to a host of civil and criminal proceedings being pursued against the company promoters, the registrar, in his orders, also questioned the claim of the DCHL that Sarfaesi action has been taken only to the tune of 9.78 per cent of its securities.

“A large number of secured creditors, including Indiabulls, Canara Bank, Kotak Mahindra, JM Financial, IDFC, SBI among others have initiated a similar action much more than what has been stated by the company,” it said.

Deccan Chronicle running out of options after BIFR rejects application

Deccan Chronicle Holdings can contest BIFR’s decision. Photo: Mint

Live Mint ;26 Dec 2013

DCHL may have to consider selling parts of the business after BIFR refused to declared it a sick company

Hyderabad: Debt-laden publisher Deccan Chronicle Holdings Ltd (DCHL) received a setback after the Board for Industrial and Financial Reconstruction (BIFR) rejected its application to be declared a sick company, saying it withheld crucial information and misrepresented itself as an industrial entity, leading once again to uncertainty about its future.

BIFR declined DCHL’s application under the Sick Industrial Companies (Special Provisions) Act, 1985, as the company is primarily engaged in publishing newspapers, which is not considered a manufacturing activity under the Industries (Development and Regulation) Act.

“Although the company is primarily in the business of newspaper, it had filed the reference showing its business to be that of printing, which was completely misleading and factually incorrect,” V.P. Bhardwaj, secretary, BIFR, said in an order dated 21 November. Financial news website Moneylife reported the development on Saturday.

The decision means DCHL is running out of options to keep its lenders at bay and may have to consider selling parts of the business. Being declared a sick company would have given it protection from the creditors while it tried to revive itself. Several creditors have asked for DCHL to be wound up so they can recover their dues.

DCHL can contest BIFR’s decision, but it wasn’t immediately clear if it plans to do so. Aides at the offices of chairman Venkattram Reddy and vice-chairman P.K. Iyer said they were out of town. An email sent to Iyer on Tuesday did not elicit a response till the time of going to press.

BIFR also said DCHL in its application concealed an ongoing probe by the Central Bureau of Investigation (CBI) against its chairman, and did not disclose an inquiry by the ministry of corporate affairs for alleged violations of the Companies Act.

It also pulled up DCHL for misrepresenting the quantum of its securities seized under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act.

BIFR said it found that a “large number” of secured creditors and asset reconstruction companies—India Bulls Financial Services Ltd, Canara Bank, Kotak Mahindra Bank Ltd, State Bank of India, JM Financial Asset Reconstruction Co. Pvt. Ltd, Pegasus Assets Reconstruction Pvt. Ltd andIDFC Ltd—had initiated steps to recover their dues under the Sarfaesi Act, contrary to DCHL’s claim that action had been taken only on 9.78% of its securities.

A company cannot refer itself to BIFR once its financial assets have been acquired by a securitization or a reconstruction company under the Sarfaesi Act.

“By going to BIFR you are getting shelter from all creditors. That’s the principal benefit…For the board to make a decision, to make up its mind, it has to have all the relevant information,” said Sujjain Talwar, partner at legal firm Economic Laws Practice.

Analysts say the rejection of DCHL’s application bodes well for its secured lenders.

“Now the pressure from the lenders would resume and might even increase,” said Satish Kantheti, head of equity research at Hyderabad-based broker Zen Securities Ltd. “Secured lenders are relatively better placed than unsecured lenders. Those who have security will be able to act and get some possession. The others have a problem.”

An official with a private bank with exposure to DCHL said the publisher’s loans were taken out of the lender’s books two quarters ago. “Some of it has been given for asset restructuring. A significant amount was also recovered,” this official said.

Hyderabad-based Andhra Bank, which lent Rs.200 crore, refused to comment on the implications of BIFR’s ruling. An official of the bank, on condition of anonymity, said the bank has started taking possession of properties pledged to it as collateral under the Sarfaesi Act.

Talwar said DCHL can appeal against the BIFR order with an appellate body, or contest the order by filing a writ petition in a high court and then a special leave petition in the Supreme Court.

DCHL, which has Rs.3,777 crore of debt on its books, had already suffered setbacks in debt recovery tribunals and other legal forums. An earlier option to explore corporate debt restructuring also failed.

Kotak Mahindra Bank recently secured permission from the Andhra Pradesh high court to sell DCHL’s Kondapur press if the management fails to settle dues to it by 28 February. Last week, the Supreme Court refused to entertain a plea by DCHL against the high court order, PTI reported.

“They need to reach some sort of compromise with lenders. Whether the lenders will agree for a compromise is another big question,” said Kantheti of Zen Securities.

The promoters of DCHL re-mortgaged the same assets with different banks to avail loans, leading to legal contests between some lenders. IDBI Bank Ltd and Axis Bank Ltd, for instance, are sparring over who has ownership to DCHL’s titles—Deccan Chronicle, Financial Chronicle, Asian Age andAndhra Bhoomi.

HT Media Ltd, publisher of Mint and Hindustan Times, competes with DCHL in some markets.

Debt-ridden Deccan Chronicle goes to BIFR

 F E :Friday, September 20, 2013

SUMMARYDeccan Chronicle Holdings (DCHL) has approached the Board for Industrial and Financial Reconstruction (BIFR) seeking a bailout under the Sick Industrial Companies (Special Provisions) Act of 1985, reports

 Deccan Chronicle Holdings (DCHL) has approached

the Board for Industrial and Financial Reconstruction (BIFR) seeking a bailout under the Sick Industrial

Companies (Special Provisions) Act of 1985, reports fe Bureau in Hyderabad. The company on Wednesday informed the Bombay Stock Exchange that the board of BIFR had registered its reference under Section 15(1) of the Act. The company is facing a Central Bureau of Investigation probe into alleged financial irregularities by its management.

The company informed the BSE: “The Board for Industrial and Financial Reconstruction (BIFR) has registered our reference under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985 as Case No.66/2013 vide their letter No. 3(D-1/BC/2013) dated September 17, 2013.’’

A three-member team from the ministry of corporate affairs (MCA), is also closely monitoring the current crisis in the company and also the alleged violations of company laws by the DCHL management. The team was directed to inspect all records pertaining to DCHL. The Central Bureau of Investigation (CBI) has also booked a case of fraud against the management. The Debt Recovery Tribunal (DRT) had recently stayed the auction of trademarks and titles of Deccan Chronicle, Financial Chronicle, Asian Age and Andhra Bhoomi dailies, belonging to DCHL. fe Bureau in Hyderabad

High court refuses to stay litigation against Deccan Chronicle

According to DCHL’s September-quarter results statement, the company had long-term borrowings to the tune ofRs.147.20 crore and short-term borrowings amounting to Rs.3,755.70 crore. Its total liabilities, both current and non-current, stood at Rs.4,207.54 crore.

Live Mint Yogendra Kalavalapalli :Wed, Apr 17 2013. 09 57 PM IST

Court asks the firm to issue notices to all creditors and direct them to file any objections to its petition by 5 June

Hyderabad: The Andhra Pradesh high court on Wednesday refused to stay any litigation pending against the financially troubled publishing firm Deccan Chronicle Holdings Ltd (DCHL).

The court was responding to a petition moved by DCHL for staying all civil and criminal proceedings pending against the company, its directors and officials in various legal forums including high courts and debt recovery tribunals in India and abroad.

Counsel for DCHL Harish Kumar said the company was in the midst of a restructuring exercise and pending agreement on the recast terms, the high court should issue an injunction restricting all legal proceedings against it. 

Twelve lenders represented by their respective advocates objected to DCHL’s petition.

Judge N.R.L. Nageswara Rao asked Deccan Chronicle Holdings to issue notices to all creditors and direct them to file any objections to its petition by 5 June, the next date for the hearing.

The publisher of Deccan Chronicle, Financial Chronicle and Asian Age newspapers and the Telugu dailyAndhra Bhoomi on 22 February informed the bourses that its board of directors had approved a scheme to restructure the entity and arrive at a compromise formula with its lenders to pay off debts amounting to over Rs.3,987.50 crore as of September. Subsequently, the Andhra Pradesh high court asked the company to convene a meeting of its shareholders and seek their approval for breaking up the business.

The company also owns stationery retail chain Odyssey, which has been incurring heavy losses, and lost its Indian Premier League cricket franchise Deccan Chargers last year after the Board of Control for Cricket in India terminated its ownership for failing to furnish a Rs.100 crore bank guarantee.

ICICI Bank Ltd, which has an exposure of about Rs.500 crore to DCHL, challenged the break-up plan in the high court saying the proposed scheme of arrangement should first be approved by market regulator Securities and Exchange Board of India before the court approves it.

Shares of Deccan Chronicle fell 0.63% to Rs.3.17 on a day the Sensex declined 0.07% to 18,731.16 points.

The company has been taken to court and the debt recovery tribunal by IFCI Ltd, Jammu and Kashmir Bank Ltd, Axis Bank Ltd, ICICI Bank, Kotak Mahindra Bank Ltd, Yes Bank Ltd, Tata Capital Ltd, PVP Capital Ltd, National Pension System Trust, and Royal Sundaram Alliance Insurance Co. Ltd seeking to strip the company of its assets.

Besides these institutions, Hong Kong-based newsprint supplier Adonis Ltd and Chennai-based print trader Photon Infotech Pvt. Ltd also moved the Andhra Pradesh high court.

Some of DCHL’s lenders have classified the loans as non-performing assets, and a few have even invoked promoters’ shares pledged as collateral leading to the stakes held by chairman T. Venkattram Reddy, vice-chairman T. Vinayak Ravi Reddy and managing director P.K. Iyer falling from 73.83% as of June 2012 to 32.66% as of March 2013.

According to DCHL’s September-quarter results statement, the company had long-term borrowings to the tune of Rs. 147.20 crore and short-term borrowings amounting to Rs. 3,755.70 crore. Its total liabilities, both current and non-current, stood at Rs. 4,207.54 crore.

HT Media Ltd, publisher of Mint and Hindustan Times, competes with DCHL in some markets.

Lenders again fail to admit Deccan Chronicle case at CDR

BS Reporter / Mumbai Sep 26, 2012, 00:19 IST


Wait for Canara Bank's forensic report


Lenders with exposure to Deccan Chronicle Holdings Ltd (DCHL) on Tuesday postponed a decision on admitting the cash-strapped company’s proposal to recast its loans under the corporate debt restructuring (CDR) route, saying they would wait for an audit report by Canara Bank.

DCHL is the parent company of the Deccan Chronicle newspaper and Indian Premier League (IPL) cricket team Deccan Chargers.

The decision regarding loan recast was put on hold,” said a senior bank executive after on Tuesday’s CDR meeting. This is the second time banks postponed the decision. Earlier, they had discussed the case on September 12.

CHRONICLE OF DEBT RESTRUCTURING

• According to the terms and conditions which govern the corporate debt restructuring (CDR) process, consent of at least three-fourth of the lenders is required to draw a debt restructuring programme for a particular company
• Another public sector bank associated with the CDR for Deccan said most lenders would convey their view after studying the forensic report
• Top lenders whose exposure to Deccan Chronicle Holdings Ltd is being considered by the CDR cell are ICICI Bank, Axis Bank, Canara Bank, IDBI Bank and Andhra Bank

CHRONICLE OF

 DEBT RESTRUCTURINGCanara Bank is conducting the forensic audit for DCHL. A top Canara Bank official said it would take at least one month to complete the work (on a forensic audit report).

According to the terms and conditions that govern the CDR process, consent of at least three-fourth of the lenders is required to draw a debt restructuring programme for a particular company. Total debt to be admitted by the CDR cell is about Rs 2,300 crore, while the banks’ total exposure to DCHL is Rs 5,000 crore.

Another public sector bank associated with CDR for the company said most lenders would convey their view only after studying the forensic report. “If the audit establishes the fraud in the company, then it won’t be considered for the CDR,” an official with the bank said.

Top lenders whose exposure to DCHL is considered by CDR cell are ICICI Bank, Axis Bank, Canara Bank, IDBI Bank and Andhra Bank.

Deccan Chronicle owes lenders over Rs 3,270 cr?

15 AUG, 2012, 05.55AM IST, TNN 

HYDERABAD: Troubled Deccan Chronicle Holdings(DCHL) has outstanding dues of well over Rs 3,270 crore that it owes to nearly 28 banks, financial institutions and non-banking financial institutions, according to details that emerged at a joint meeting ofDCHL lenders held in Mumbai on August 8.

These outstanding dues are understood to be by way of term loans, commercial papers and non-convertible debentures ranging from Rs 490 crore to Rs 10 crore. The meeting, which was chaired by Axis Bankpresident Sidharth Rath, is learnt to have been attended by representatives of IDFC, ICICI Bank, LIC,Yes Bank, Central Bank of India, Tata Capital, HDFC Bank, IFCI and Ratnakar Bank.

According to sources, DCHL lenders are mulling the possibility of forming a five-member committee of senior lenders, based on outstanding dues, to represent the interest of lenders and negotiate the recovery of their dues with the DCHL promoters. The lenders are also planning to hold a meeting with DCHL promoters and Religare representatives in a bid to pressurize them to share updates on the sale of assets of DCHL and Deccan Chargers.

According to sources, the lenders discussed various alternatives by which they could recover their outstanding dues from the DCHL promoters.

These include unlocking the value of Deccan Chargers and DCHL brands and selling off their assets before there is a further deterioration in their value, private placement of pledged shares, approaching the ministry of finance or Company Law Board for a change in management of DCHL, and actions for change of management of DCHL through the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI).

The lenders are also learnt to be exploring the possibility of sharing details of collaterals available with them and taking ajoint decision for sale of the collateral in addition to asking DCHL promoters to sell their unencumbered assets/collaterals on behalf of banks and then utilize the sales proceeds to recover dues on a pre-agreed sharing ratio basis.

From the discussions held at the meeting, it is also learnt that while some banks and DCHL promoters have already approached various media groups with offers to purchase the assets of DCHL, a prompt decision for acquisition was unlikely as these media groups were interested in unencumbered assets and may get DCHL assets at a much lesser value with the passage of time.

The company's scrip, meanwhile, continued its downward journey, hitting yet another lifetime low of Rs 10.55 a share on the Bombay Stock Exchange on Tuesday.

While DCHL promoters owe ICICI Bank Rs 490 crore, they have dues of Rs 400 crore with Axis Bank, Rs 330 crore with Canara Bank, Rs 200 crore with Andhra Bank,Rs 175 crore with Yes Bank, Rs 170 crore with Future Capital Holdings (now the loan has been acquired by Kishore Biyani) and Rs 145 crore due to IDFC.