No higher payout to DHFL depositors; lenders vote against raising payout to FD, NCD holders

June 24, 2021 5:00 AM

PCHF acquired DHFL with a winning bid of Rs 37,250 crore. The transaction, approved by the bankruptcy court on June 7 implied a very low 40% recovery for lenders on a total exposure of Rs 87,082 crore.

DHFLDHFL has been undergoing insolvency proceedings at NCLT in Mumbai since December 3, 2019. The troubled mortgage lender has admitted claims of Rs 87,120 crore, with State Bank of India (SBI) being the lead creditor.

By Ankur Mishra

Lenders to Dewan Housing Finance (DHFL) are not in favour of a higher payout to fixed deposit (FD) holders and those holding non-convertible debentures (NCDs). A proposal to raise the payout for FD holders to 40% of their dues of Rs 5,400 crore, from 23% has been shot down; 89% of votes went against it, sources close to the developments told FE. In the case of NCD holders, who are owed Rs 1,500 crore, lenders were voting to increase the payout to 40% from 5% decided upon earlier. However, they decided against it.

The NCLT (National Company Law Tribunal) had directed the committee of creditors (CoC) to ‘consider’ returning more money to the FD and NCD holders. The objective was to try and pay them in line with the payments to other financial creditors. However, the tribunal had made it clear that Piramal Capital and Housing Finance (PCHF) was not obliged to bring in additional funds to repay depositors.

PCHF acquired DHFL with a winning bid of Rs 37,250 crore. The transaction, approved by the bankruptcy court on June 7 implied a very low 40% recovery for lenders on a total exposure of Rs 87,082 crore.

In its order on June 7, the tribunal observed investments in FDs and NCDs are considered to be low-risk in nature compared with equity. As such, small investors should not be put to more risk and be asked to take a bigger haircut than stronger financial institutions. It is possible depositors may soon take recourse to the law. Vinay Kumar Mittal, a lead petitioner for deposit holders, told FE he would approach the appellate tribunal or NCLAT.

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