NCLT okays Piramal’s bid for DHFL with some conditions

By: |
June 08, 2021 5:45 AM

The tribunal also rejected the plea of former DHFL promoter Kapil Wadhawan to get access to a copy of the resolution plan.

On the 14th page of the 86-page NCLT order by HP Chaturvedi and Ravikumar Duraisamy, it says DHFL no longer is a deposit taking NBFC but a non-deposit taking one.On the 14th page of the 86-page NCLT order by HP Chaturvedi and Ravikumar Duraisamy, it says DHFL no longer is a deposit taking NBFC but a non-deposit taking one.

The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday approved Piramal Capital and Housing Finance’s (PCHFL) Rs 37,250-crore resolution plan for Dewan Housing Finance (DHFL) with a few conditions.

It asked the company’s 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,” the NCLT said. It is likely that the CoC may consider reallocation of funds under approved resolution plan for FD holders.

The tribunal also rejected the plea of former DHFL promoter Kapil Wadhawan to get access to a copy of the resolution plan.

The bench chaired by HP Chaturvedi and Ravikumar Duraisamy, however, said the approval is subject to the final outcome of the matter before the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court.

The Mumbai NCLT had earlier directed the administrator of DHFL to consider the settlement offer made by Wadhawan, which was stayed by the NCLAT. Staying the order, the appellate tribunal had said the same should not act as an obstacle for NCLT in passing the final order relating to the resolution plan of the successful bidder.

Subsequently, Wadhawan had moved the SC challenging the stay granted by NCLAT but did not get any relief by way of stopping the NCLT from going ahead in approving the resolution plan of the successful bidder.

The FD holders of DHFL are, however, planning to approach NCLAT soon against the NCLT order. “We are definitely going to move NCLAT as we want our full amount back,” Vinay Kumar Mittal, a lead petitioner in the court on behalf of FD holders, told FE.

DHFL owes Rs 5,370 crore from fixed deposit holders.

Overall, PCHFL’s Rs 37,250-crore offer for DHFL implies around 40% recovery for the financial creditors on a total admitted claims of Rs 87,082 crore. State Bank of India (SBI) is a lead creditor to DHFL with admitted claims of Rs 7,170 crore.

In an interaction with CNBC TV18, SBI chairman Dinesh Kumar Khara said bank may receive money from DHFL resolution during the second quarter of the current financial year (Q2FY22).

The resolution of DHFL is important as it is the first financial services firm to be sent to the bankruptcy tribunal after the government notified the rules for referring financial services providers (FSPs) on November 15, 2019. Later, DHFL was admitted for insolvency proceedings at NCLT in Mumbai on December 3, 2019, after RBI superseded mortgage lender’s board.

In a statement, Piramal Group said, “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 statement further said.

Experts point towards few legal hurdles in the resolution of DHFL despite the NCLT’s approval. Ashish Pyasi, associate partner at Dhir and Dhir Associates said, “As the resolution plan is approved subject to the outcome of the appeals therefore the orders passed in the appeal will have an implication on implementation of the plan”.

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