An insolvency court today conditionally approved Piramal Group’s overall resolution plan for financially troubled Dewan Housing Finance Corporation Ltd (DHFL) under the bankruptcy process.
The Mumbai bench of National Company Law Tribunal (NCLT) has asked the Committee of Creditors (CoC) to consider allocating more money to small fixed deposit (FD) holders of DHFL under the approved resolution plan, confirmed a person aware of the development.
FD holders along with NCD (non-convertible debentures) claim that, of DHFL’s total debt of around Rs 91,000 crore, almost half or around Rs 45,000 crore, is owed to them, Rs 35,000 crore to banks and balance Rs 5,000 crore to other creditors.
In its resolution plan, Piramal group has proposed to pay additional cash of around Rs 150 crore to FD holders.
In a statement after the NCLT judgment, Piramal Group said, “We are pleased with the judgment today by the NCLT for approving our resolution plan for DHFL. 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,” it further said.
The nod announced orally today is subject to final orders from the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court which is hearing a plea on a settlement offer by DHFL’s former promoter Kapil Wadhawan, who is behind bars after being co-accused in a multi-crore scam in Yes Bank’s fraud and bribery case.
Rejecting Wadhawan's plea to get access to a copy of the resolution plan, the two-member NCLT bench said it was not remanding the resolution plan back to the CoC respecting “their commercial wisdom," the person added.
The NCLT bench had recently asked the CoC to reconsider the Rs 91,000 crore settlement proposal offered by Wadhawan.
This order was set aside by the NCLAT on May 25 in an interim order, following which Wadhawan moved the Supreme Court challenging the higher tribunal’s decision.
The Supreme Court and NCLAT's final order is pending on this matter.
The Piramal offer of around Rs 35,500 crore beat American asset manager Oaktree Capital’s bid of around Rs 36,700 crore with more upfront cash and other conditions, and received an approval from the Reserve Bank of India (RBI) in February.
Under Piramal’s resolution plan, lenders are taking a haircut of around 57%.
DHFL’s bankruptcy process has been going on since November 2019 when it became the first non-banking finance company (NBFC) to be dragged to bankruptcy by creditors led by State Bank of India on the directions of the RBI.