The troubles for Delhi-based kidswear company Lilliput Kidswear Ltd do not seem to end as another financial institution has taken the firm to the court. Just weeks after one of its key lenders Tata Capital filed a case against Lilliput Kidswear for loan default, Taiwan’s Chinatrust Commercial Bank Ltd took the company to Delhi High Court for failing to repay working capital loan.
Chinatrust has filed a winding up petition stating that Lilliput is unable to pay its debts allegedly amounting to Rs 15.15 crore. It said in its petition that Lilliput had availed working capital demand facility of Rs 15 crore, but the cheque issued by Lilliput had been dishonoured.
This comes right after Tata Capital filed a winding up petition against the company last month.
An e-mail query sent to Chinatrust Commercial Bank and another query sent to Lilliput’s founder and MD Sanjeev Narula did not get any response till the time of filing this article.
Tata Capital had filed a petition in the Delhi High Court to recover the outstanding debt amounting to Rs 10 crore. Lilliput had apparently defaulted on the loan last October, following which rating agency ICRA downgraded the long-term debt note of the company. Bank of India is another lender to Lilliput.
Lilliput Kidswear hit the headlines four months ago after its PE investors took an unusual step and did not approve the annual accounts of the company in a board meeting held in September. The incident put a spanner in the proposed initial public offer (IPO), aimed at generating resources for the company.
The investors alleged that Lilliput did not maintain proper accounts while the promoters, led by Sanjeev Narula, counter-alleged that the PE firms were looking to take over the control of the company by derailing the proposed public issue as they did not want to dilute their holdings. In the judgement dated November 4, 2011, it was decided that SS Kothari Mehta & Company would be appointed to carry out an independent audit and both the parties would give their points of reference to the audit firm.
Separate media reports suggested that the two sides had resolved their differences and agreed to a capital infusion of around Rs 500 crore ($100 million). But last month, the counsel of the PE investors pointed out that communications had shown Lilliput was not providing relevant papers to the auditor.
With the two cases filed by two different financial institutions, Lilliput would need to expedite its fundraising plans to sort out the issues.
ChinatrustCommercial Bank is one of the largest private banks in Taiwan and has a presence in India since 1996 through its Delhi branch. This branch offers corporate banking services like working capital finance, trade and transactional services, foreign exchange and cash management, among others.
See our earlier reports here
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