Bank of New York Mellon has filed a petition for winding up the Chandigarh based Venus Remedies after the latter defaulted on the redemption of the Foreign Currency Convertible Bonds (FCCB). Hedge funds D.E. Shaw and Citadel Investment Group have invested in the FCCBs.

The winding up petition is pending before the High Court of Punjab and Haryana. BNY Mellon's local counsels Deepak Suri and Radhika Suri are being briefed by the Bombay offices of AZB & Partners. Sources inform us that Dispute Resolution Partner Rajendra Barot, assisted by Ananya Sharma, is instructing the Suris.

DE Shaw and Citadel had subscribed to the $12 million issue in 2006. Venus failed to pay the investors when the bonds came to maturity. This is the first instance in India of FCCB investors seeking the winding up of a company.

A host of companies ranging from Tata Motors, Videocon Industries and Suzlon Energy, to smaller mid caps like Aksh Optifibre, Subex Ltd and Marksans Pharma, are counting the FCCB time bomb.

Subex, for example, borrowed when the economy was booming and its share prices were trading high. The telecom software firm raised Rs. 864 crore ($180 million) in March 2007 to fund its acquisition of Canadian firm Syndesis. The conversion price was set at Rs 656 ($13.6) a share. But as of today (September 10), the stock closed at Rs 72.40 ($1.5) on the BSE with a market cap of $52.5 Million (252 Crores).