NCLT gives approval to Piramal's resolution plan for DHFL

FPJ Web DeskUpdated: Monday, June 07, 2021, 04:41 PM IST
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The Piramal Group has offered Rs 37,250 crore to DHFL’s creditors. |

The National Company Law Tribunal (NCLT), on June 7, approved Piramal Group’s overall resolution plan for mortgage lender, Dewan Housing Finance (DHFL), with a few conditions.

The tribunal's Mumbai-bench, chaired by H P Chaturvedi and Ravikumar Duraisamy, said the approval is subject to the final judgement from the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court''s judgement on Kapil Wadhawan in the matter.

In its order, NCLT askd DHFL''s (Dewan Housing Finance Corporation Ltd) Committee of Creditors (CoC) to consider giving more money to small fixed deposit holders under the approved resolution plan.

"We are not remanding the plan back to CoC, we respect their commercial wisdom," it said.

The Piramal Group has offered Rs 37,250 crore to DHFL’s creditors. This includes Rs 12,700 crore in upfront cash, Rs 3,000 crore in interest income already on DHFL’s books, as well as Rs 19,550 crore worth of non-convertible debentures to be repaid over 10 years, according to Bloomberg.

NCLT rejected a plea by former DHFL promoter Kapil Wadhawan's to get access to a copy of the resolution plan was rejected.

In a statement, Piramal Group said it was "pleased" by the judgement. In a statement, it said, "We are pleased with the judgment today by the Honorable NCLT for approving our resolution plan for DHFL. This follows the endorsement of 94% of lenders, and the subsequent approvals from RBI and CCI, and reiterates the strength and quality of our bid.

"This is one of India’s largest IBC proceedings, and the very first in the financial sector. In that regard, it is an important and positive trendsetter for the future. The approval from NCLT is a significant milestone in DHFL's resolution and an affirmation of the sanctity of the IBC process in India.

"We are committed to collaborating with all relevant authorities, regulators, creditors and investors involved in this resolution and look forward to a speedy culmination of the resolution process.”

The CoC had in January accepted Piramal Group’s resolution bid and this was approved by the RBI on February 18. Piramal Enterprises, a diversified Indian conglomerate, got more than 94 percent votes for its bid. A resolution plan needs a minimum of 66 percent votes to be passed by lenders, who can vote a preference for more than one bidder.

Wadhawan is accused in Yes Bank-DHFL loan bribery case.

The tribunal's Mumbai-bench, chaired by H P Chaturvedi and Ravikumar Duraisamy, said the approval is subject to the final judgement from the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court''s judgement on Kapil Wadhawan in the matter.

In its order, NCLT asked DHFL''s (Dewan Housing Finance Corporation Ltd) Committee of Creditors (CoC) to consider giving more money to small fixed deposit holders under the approved resolution plan.

"We are not remanding the plan back to CoC, we respect their commercial wisdom," it said.

On May 25, NCLAT stayed the direction of NCLT asking the lenders of DHFL to consider the offer by Wadhawan.

The appellate tribunal had also clarified that its order should not come in the way for NCLT to decide on approval for the resolution plan selected by the CoC.

NCLAT''s direction had come on an urgent petition moved by the Union Bank of India on behalf of the CoC.

On May 19, NCLT asked the RBI-appointed administrator of DHFL to present the settlement plan offered by Wadhawan to the CoC.

In January this year, the CoC voted in favour of selling DHFL to the Piramal Group under the Insolvency and Bankruptcy Code.

Last year, Wadhawan had made his settlement offer to the CoC. The offer was rejected by the creditors, citing lack of credibility and the valuations attached to the proposed asset sales. In the plan, Wadhawan had proposed to repay lenders by selling assets.

In November 2019, RBI had referred DHFL -- then the third-largest pure-play mortgage lender -- for resolution under the Code.

DHFL debt woes

DHFL had gone bankrupt with more than Rs 90,000 crore in debt to various lenders, including banks, mutual funds and individual investors who kept fixed deposits with the company.

A shadow lender in the home loans space, DHFL owes its lenders around Rs 91,000 crore. State Bank of India is its biggest creditor, with an exposure of around Rs 10,000 crore. Other lenders include Bank of India, Canara Bank, NHB, Union Bank of India, Syndicate Bank, and Bank of Baroda.

The RBI had on November 20, 2019, superseded DHFL's board of directors on account of "governance concerns and defaults by DHFL in meeting various payment obligations".

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