DHFL Administrator’s Legal Adviser Pushes Back Wadhawans’ Offer

The response came after the Wadhawan family offered to repay lenders Rs 43,000 crore from family assets, according to a PTI report. The family claimed that their offer, which came as other resolution plans were submitted, would lead to maximum recovery for creditors, PTI reported.

According to the people quoted above, the legal adviser has raised two primary objections.

First, promoters Kapil Wadhawan and Dheeraj Wadhawan and other entities mentioned in the settlement offer are already respondents in fraud cases filed by the administrator. Since the matters are subjudice, the respondents in the case are prohibited from the sale of their assets.

In September, the administrator for DHFL, after consultation with lenders, approached the Mumbai bench of the National Company Law Tribunal to mark Rs 14,000 crore worth retail loans as fraudulent. After a transaction audit by Grant Thornton, it was alleged that these retail loans had been siphoned off to various entities, which according to an exchange notification, were referred to as Bandra Books Entities. The Grant Thornton audit also found certain funds extended as loans for the development of slum rehabilitation projects in Mumbai were diverted to entities related to the promoters.

Second, nearly all properties that DHFL’s promoters have offered as part of the settlement plan are those where the housing finance company already has legal and equitable interests, the people quoted above said. The law firm believes that these properties or assets can’t be offered to lenders afresh, the people quoted above said.

Lenders, according to BloombergQuint’s prior report, had received resolution plans from four potential bidders—Oaktree Capital Management, Piramal Group, Adani Group and SC Lowy. They are currently in the process of considering these offers.

If the promoters of DHFL are able to raise money legally and submit a fresh resolution plan which does not breach existing laws, then such a plan could be considered by the administrator, the law firm has opined, the people quoted above said.

AZB & Partners in an emailed response to BloombergQuint’s queries sent Thursday night, said, “Given the sensitivity of this matter, we can’t offer any comments at this stage.” Emails and text messages sent to DHFL’s administrator didn’t elicit a response.

DHFL was placed under insolvency on orders of the Reserve Bank of India in November 2019. The regulator also suspended the housing finance company’s board and appointed an administrator to run daily affairs. The resolution process under insolvency has seen considerable delays owing to the Covid-19 pandemic. Lenders are currently negotiating with the four bidders who have shown interest in DHFL’s assets.