DHFL resolution: NCLAT stays NCLT order on promoter Wadhawan’s offer

By: |
May 26, 2021 4:10 AM

Says case won't act as impediment for NCLT to approve successful bidder's offer

The lenders' stand that his offer cannot be accepted as he was facing criminal proceedings cannot be used as a justification to cause an avoidable loss of over Rs 50,000 crore, Wadhawan said.The lenders' stand that his offer cannot be accepted as he was facing criminal proceedings cannot be used as a justification to cause an avoidable loss of over Rs 50,000 crore, Wadhawan said.

The National Company Law Appellate Tribunal (NCLAT) on Tuesday stayed the May 19 order passed by the Mumbai bench of the National Company Law Tribunal (NCLT), which had directed the administrator of Dewan Housing Finance (DHFL) to consider the settlement offer made by its former promoter, Kapil Wadhawan. Wadhawan is currently in jail in an alleged bank fraud case.

Though the appellate tribunal fixed June 25 as the next date of hearing, and agreed to hear the pleas made by the committee of creditors (CoC), DHFL’s RBI-appointed administrator and the Piramal Group, which have challenged the Mumbai NCLT order; it said that this case will not act as an obstacle for passing the order relating to the resolution plan of the successful bidder.

“It appears appropriate to us that till we decide the appeal, the impugned orders should be stayed,” a vacation bench of NCLAT, comprising the officiating chairperson, justice chairman A I S Cheema, said. The bench observed that it was “unable to appreciate the hurry imposed on the administrator and CoC to consider the second settlement proposal (by Wadhawan)”. “We find that there are serious issues which are being raised (by the appellants) and which need consideration,” it said.

“Here the matter had proceeded to the stage where even resolution plan had been approved and was before adjudicating authority. There would be no end if such reversals are allowed. There is no dispute regarding the fact that resolution plan has already been approved and is before the adjudicating authority. Without deciding the same, the present order has been passed,” the NCLAT observed.

The NCLT’s order had put a spanner in the entire resolution process, as the lenders had in January voted in favour of Piramal Group’s Rs 34,250-crore resolution plan, which was also approved by the RBI on February 18. The lenders had subsequently taken the proposal to the NCLT for the final approval.

The DHFL resolution has been in process since November 2019 when DHFL became the first financial services company to be taken by the lenders to NCLT.

Wadhawan had made an offer in the past also but the lenders had refused to consider it based on legal advice since his eligibility to make a bid under Section 29A of IBC was dountful.

The troubled mortgage lender has admitted claims of `87,120 crore, with State Bank of India (SBI) being the lead creditor. Bondholders have claimed Rs 45,550 crore while financial creditors have sought Rs 41,342.23 crore from it.

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