NCLT asks DHFL lenders to consider Wadhawan’s offer

The resolution of scam-hit DHFL has taken a new twist, with the National Company Law Tribunal (NCLT), Mumbai, asking the company’s committee of creditors (CoC) to consider former Chairman & Managing Director Kapil Wadhawan’s resolution plan within next 10 days.

This comes even as the Tribunal is weighing DHFL (Dewan Housing Finance Corporation Ltd) Administrator’s application on the resolution plan of Piramal Capital & Housing Finance Limited (PCHFL) as approved by the CoC.

The Administrator had filed the aforesaid application for NCLT’s approval on February 24, 2021, in the wake of receipt of “no objection” from the Reserve Bank of India (RBI) as per Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.

The CoC by majority voting approved the resolution plan submitted by PCHFLin January 2021 under section 30(4) of the Insolvency & Bankruptcy Code

Bankers say since PCHFL’s resolution plan has been approved by majority of the lenders, it is unlikely that their decision will change.

Banks expect to receive initial proceeds from DHFL’s resolution from PCHFL, which is a wholly-owned subsidiary of Piramal Enterprises, in the second quarter.

Piramal Enterprises Ltd (PEL) said PCHFL has received fit and proper approval from the Reserve Bank of India on February 16, 2021 and approval from Competition Commission of India for the acquisition of DHFL on April 12, 2021.

“An application has been submitted to NCLT for the approval of the resolution plan. The implementation of the resolution plan is subject to the terms of the LOI (letter of intent) and other applicable regulatory approvals,” PEL said in a regulatory filing last week.

The claims of lenders admitted in NCLT in the case of DHFL aggregated to about ₹81,000 crore.

PEL, in its third quarter FY21 results, said that the total consideration for DHFL was ₹34,250 crore, which includes an upfront cash component of ₹14,700 crore (towards assets including the cash on DHFL’s balance sheet) and a deferred component (non-convertible debentures) of ₹19,550 crore.

Wadhawan’s proposal

Wadhawan, in a letter to DHFL Administrator and CoC, claimed that his proposal (made in December 2020) to CoC, provides for full repayment of the principal to all the creditors.

His proposal includes an upfront payment of Rs 9,000 crore in cash out of the free cash on the books of DHFL; Rs 31,000 crore to be paid within seven years in equal annual installments with 8.5 per cent interest.

Further, the aforementioned proposal also includes Rs 12,000 crore to be repaid within seven years in equal annual installments following a one-year moratorium with 11 per cent interest after two years of interest moratorium; and Rs 18,000 crore to be repaid within five years in equal annual installments following a five year moratorium with 11 per cent interest.

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