The Mumbai bench of the National Company Law Tribunal (NCLT) has approved the Piramal Group’s resolution plan for Dewan Housing Finance Limited (DHFL). The order is subject to the outcome of the appeal in the appellate tribunal and the Supreme Court.
Piramal’s plan offers to pay Rs 37,250 crore, with upfront cash of Rs 12,700 crore; it has already been approved by the committee of creditors (CoC), the Reserve Bank of India (RBI), and the Competition Commission of India (CCI).
NCLT has asked the committee of creditors to allocate more funds to the fixed deposit holders and small investors, but ot has left the final decision to the CoC. It has also rejected the erstwhile promoter’s plea to get a copy of the resolution plan.
“We are pleased with the judgment today by the Honorable NCLT for approving our resolution plan for DHFL. This follows the endorsement of 94% of lenders, and the subsequent approvals from RBI and CCI, and reiterates the strength and quality of our bid”, the Piramal Group said in a statement.
“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,” the statement added.
Kapil Wadhawan, the erstwhile promoter of DHFL, has moved the Supreme Court to get a stay on the National Company Law Appellate Tribunal order, which stayed an earlier order of the Mumbai Bench of National Company Law Tribunal (NCLT) asking the committee of creditors (CoC) to consider the settlement offer Wadhawan put forward.
Lenders, the RBI-appointed administrator of DHFL, and Piramal Group in May moved the appellate tribunal, challenging the order passed by the NCLT, which asked them to consider Wadhawan’s offer. The appellate tribunal gave the appellants relief by staying the NCLT’s order and asked them to pass order on the approval of the resolution matter, which was pending before the same bench.
DHFL became the first financial services company to be referred to the NCLT by RBI in November 2019 after it defaulted on its payments and the lenders failed to find a resolution under the June 7 circular of the RBI.
The creditors have claimed dues of Rs 87,000 crore. The liquidity crisis after the collapse of IL&FS in 2018 led to DHFL’s downfall. Before that, it was one of the largest mortgage lenders in the country.
