NCLT approves Piramal Group's resolution plan for DHFL
Premium- The Mumbai bench of NCLT has rejected former DHFL promoter Kapil Wadhawan’s plea to consider his offer for settlement
MUMBAI: The National Company Law Tribunal (NCLT) on Monday approved Piramal Capital & Housing Finance Ltd (PCHF)’s resolution plan for the stressed mortgage lender Dewan Housing Finance Ltd with a few conditions. The Mumbai bench of NCLT has rejected former DHFL promoter Kapil Wadhawan’s plea to consider his offer for settlement.
“Resolution Applicant’s amount to remain the same. Only inter-se allocation to be reconsidered. Following ruling in Essar Steel Ltd, expect gestures from Committee of Creditors. But cannot substitute their wisdom," the Mumbai bench of the tribunal said. The NCLT’s detailed order is awaited.
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In its order the tribunal asked the company’s committee of creditors (CoC) to consider giving more money to small fixed deposit holders (FD) under the resolution plan. Besides the Piramal plan, the NCLT also ruled on National Housing Bank’s case in which it directed the CoC to consider repaying NHB the full amount from the ongoing resolution process on a preferential basis.
Piramal Group has offered ₹37,250 crore to DHFL’s creditors. This includes ₹12,700 crore in upfront cash, ₹3000 crore in interest income on DHFL’s books and ₹19,550 crore worth of non-convertible debentures to be repaid over 10 years. While the group has bid for both the retail and wholesale piece, it is keenly interested in the retail portfolio of DHFL. Going forward PCHF will decide whether to integrate the wholesale book with the company or sell it off or hive into a separate division.
“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," said Piramal Group in a statement post the results.
PCH has already received approvals from the Competition Commission of India (CCI) and Reserve Bank of India for its bid to take over DHFL. PCHFL’s resolution plan for DHFL had received 94% votes by the committee of creditors.
However, things took a U-turn in May after the erstwhile promoter of DHFL Kapil Wadhawavan filed a case in the NCLT asking the lenders to consider his offer to fully settle the mortgage lender’s ₹91,000 crore dues, including ₹43,000 crore in the initial few years. the NCLT passed an order asking the administrator of DHFL to place the offer before the committee of creditors. It also asked the CoC to convene in 10 days to consider the proposal.
Reacting to this appeal, the CoC led by Union Bank, and the Reserve Bank of India appointed administrator filed separate applications in the National Company Apellate Tribunal challenging NCLT's order. In its appeal, the administrator termed the NCLT order as “illegal and in breach of settled provision of law". The insolvency law prohibits the promoter or management of any bankrupt company from attempting to re-acquire it.
Late last month, the National Company Law Appellate Tribunal (NCLAT) stayed the NCLT Mumbai bench's order which directed lenders to consider Wadhawan’s offer. This led to Wadhawan moving the Supreme Court challenging the stay in NCLT Mumbai bench's order.
Wadhawan, who is facing charges of money laundering and diversion of bank funds, has repeatedly accused DHFL’s lenders of selling the company much below its fair value. Last November, Wadhawan requested an RBI-appointed DHFL administrator to be included in the bidding process, but the lenders chose to go for Piramal, which emerged as the highest bidder after an intense bidding war between Oaktree Capital, Adani group and distressed assets buyer SC Lowy.
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