Kotak AMC And Axis Mutual Fund Move High Court Against DHFL
Kotak Mahindra Asset Management and Axis Asset Management on Thursday moved the Bombay High Court seeking a direction to the crippled mortgage lender Dewan Housing Finance Corporation Ltd. to disclose all its assets and liabilities.
The petitioners also prayed for a temporary restraint on DHFL to prevent it from making further payments/disbursements to secured and unsecured creditors, except certain payments made on pro-rata basis to secured creditors.
The court has granted four weeks time for the parties to file replies.
Earlier this month, the court had restrained DHFL from making further payments/disbursements to any unsecured creditors until further orders.
The court granted a plea of Reliance Nippon Asset Management (recently renamed Nippon India Mutual Fund) to restrain lenders from disposing of any assets.
The court also allowed Edelweiss Asset Management Company's prayer to disclose all assets and liabilities of the non-bank lender.
A debt resolution plan, approved by the lenders led by Union Bank in August, is awaiting final approval as mutual funds are yet to sign the inter-creditor agreement.
The beleaguered home financier owes Rs 83,873 crore as of July 6, 2019 to banks, the National Housing Board, mutual funds and bondholders, including retail bondholders. And as of July 6, DHFL's secured debt was Rs 74,054 crore while the unsecured debt stood at Rs 9,818 crore.
The mutual funds have to sign the inter-creditor agreement if the resolution plan were to get going. According to the Reserve Bank's June 7 NPA resolution framework, for a resolution plan to be passed, 75 percent of lenders by value and 60 percent by numbers must approve it and sign the agreement.
Under the draft resolution plan submitted by DHFL, the lenders would pick up 51 percent in the third largest mortgage lender by converting a part of their debt into equity.
The company has been facing liquidity issues since last September and yet has paid back Rs 41,000 crore of its financial obligations through a combination of securitization of assets and repayment collections since.
The Wadhawan family, who owns a little over 39 percent in the company, has been looking at various ways to come out of the stress which first came to light late last year following the IL&FS bankruptcy.
These include selling stakes in group entities, including in the flagship to the extent of giving up management control.