NCLT approves Piramal Group's Rs37,250-cr resolution plan for DHFL
07 June 2021
The National Company Law Tribunal (NCLT) on Monday gave its approval for the Rs37,250 crore resolution plan submitted by Piramal Group for the stressed Dewan Housing Finance Ltd (DHFL). The bid amount will enable lenders to recover around 40 per cent of their total claims of Rs87,082 crore.
However, the tribunal's Mumbai-bench, chaired by H P Chaturvedi and Ravikumar Duraisamy, said the approval is subject to the final judgement of the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court's judgement on Kapil Wadhawan’s petition in the matter.
Wadhawan moved the Supreme Court against the NCLAT's 25 May interim order, which set aside NCLT's decision to get lenders to consider a Rs91,000 crore settlement offer from Wadhawan to take the company out from bankruptcy process.
Wadhawan had also, last November, requested an RBI-appointed DHFL administrator to be included in the bidding process, but the lenders chose to go for Piramal, which emerged as the highest bidder after an intense bidding war between Oaktree Capital, Adani group and distressed assets buyer SC Lowy.
Piramal’s wholly owned subsidiary Piramal Capital and Housing Finance (PCHFL) has proposed to acquire DHFL for Rs37,250 crore. The plan involves delisting DHFL, writing off equity and merging the businesses into PCHFL.
Piramal Group’s Rs 37,250-crore offer includes an upfront cash payment of Rs12,700 crore to the creditors. Besides, Piramal Group has offered Rs3,000 crore of cash to lenders from the interest earned on the existing cash on DHFL’s books, another Rs1,000 crore for the insurance stake, and Rs1,000 additional cash for interest income after NCLT approval. This takes the total cash for the creditors at Rs17,700 crore. The remaining Rs19,550 crore is in the form of instruments payable over 10 years.
Piramal Capital has already received approval from the Competition Commission of India (CCI) and Reserve Bank of India for its Rs34,250 crore bid to take over DHFL.
PCHFL’s resolution plan for DHFL had received 94 per cent votes by the committee of creditors.
In its order, NCLT has asked DHFL's Committee of Creditors to consider giving more money to small fixed deposit holders under the approved resolution plan.
"We are not remanding the plan back to CoC, we respect their commercial wisdom," it said.
NCLT also rejected former DHFL promoter Kapil Wadhawan's plea to get access to a copy of the resolution plan.
The National Company Law Appellate Tribunal (NCLAT) last month stayed the NCLT Mumbai bench's order, directing the lenders of debt-ridden mortgage firm DHFL to consider the settlement offer by its erstwhile promoter Kapil Wadhawan. The appellate tribunal also directed the NCLT to decide over the application filed by the administrator over the bid submitted by Piramal Capital and Housing Finance for DHFL.
Wadhawan, who is facing charges of money laundering and diversion of bank funds, has repeatedly accused DHFL’s lenders of selling the company much below its fair value.