NCLT Asks DHFL Lenders To Consider Settlement Offer By Promoter Wadhawan
The Mumbai bench of the National Company Law Tribunal on Wednesday ordered the committee of creditors at Dewan Housing Finance Corp. to consider a settlement offer from the company’s promoter.
According to three people with direct knowledge of the matter, the creditors have been ordered to convene within 10 days to consider the offer from DHFL promoter Kapil Wadhawan. A copy of the written order is awaited.
Wadhawan had made his settlement offer to the creditors’ committee in December, however the plan was rejected. The creditors, in January 2021, voted in favour of selling DHFL to Piramal Group under the bankruptcy process.
The committee of creditors and advisors to the process are set to meet today to chart the next few steps in the process, the people quoted above said. The creditors may choose to approach the appellate tribunal to appeal against the NCLT’s order, they added.
Wadhwan is currently in jail on money laundering charges which are being investigated by the Enforcement Directorate and the Central Bureau of Investigations.
DHFL administrator R Subramaniakumar and lead lender State Bank of India did not immediately respond to queries.
The settlement plan submitted by Wadhawan, a copy of which has been reviewed by BloombergQuint, promised an upfront payment of Rs 9,000 crore to the financial creditors and full repayment of dues within seven or eight years. The repayments would be funded through a change in DHFL’s operations and creating more retail assets on the loan book.
In an earlier plan, Wadhawan had proposed to repay lenders by selling assets. Lenders had rejected that proposal citing lack of credibility and the valuations attached to the proposed asset sales.
The IBC allows withdrawal from insolvency proceedings under Section 12A of the IBC, if at least 90% of the financial creditors vote in favour of a proposal by promoters.
Section 29A of the IBC prohibits promoters and related parties from participating in the resolution process, if they are tagged as willful defaulters, or if the company is tagged as non-performing for over a year.
While lenders and regulators have approved the Piramal takeover of DHFL, the process isn’t complete yet. Approvals from the Reserve Bank of India and the Competition Commission of India are in but a final nod from the NCLT was awaited.