BOMBAY HIGH COURT ASKS WOCKHARDT TO CLEAR POSITION ON ABBOTT PROCEEDS

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THE Bombay High Court has asked troubled drugmaker Wockhardt and its promoters to clarify whether they will deposit the proceeds from the sale of its nutrition business in an escrow account, if the court allows it to complete the transaction with Abbott Laboratories. Meanwhile, another foreign unsecured lender of the pharmaceutical company, Citibank, has also issued a notice for winding up Wockhardt after the latter failed to repay debts.

   Justice SJ Kathawalla asked for the clarification while hearing a bunch of petitions filed by Calyon, Barclays Bank and foreign currency convertible bond (FCCB) holders seeking liquidation of the company. The unsecured foreign creditors opposed the company's corporate debt restructuring (CDR) scheme, which they said benefits Indian lenders. Wockhardt initiated CDR to restructure its debts and repayment period last July with the help of ICICI Bank.

   Wockhardt counsel Rafik Dada contended before the court that Wockhardt should be permitted to sell its nutrition business considering that they were getting a good deal from Abbott Laboratories. The court asked counsels Janak Dwarkadas and Aspi Chinoy, appearing for the FCCB holders and Calyon, respectively, if they had any grievances if Wockhardt sold the nutrition business and deposited all the money received from the transaction in a separate account, to which they raised no objection. However, the lawyers for the foreign lenders insisted that the money to be paid to the promoters, the Khorakiwallas, in this transaction also has to be deposited in the said account.

   Justice Kathawalla then asked the lawyers representing the company and the promoters if they were willing to deposit the receipts from the transaction in a separate account with ICICI bank during the pendency of the petitions. The counsels, however, sought time to clarify and seek instructions from Wockhardt and the Khorikiwallas on the issue. Meanwhile, the pharmaceutical company's undertaking of not selling any of its assets holds.

   Counsel Dwarkadas also brought to the court's notice that Citibank had written a letter to the FCCB holders requesting them to inform the court about its winding-up notice to Wockhardt.

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