The National Company Law Tribunal (NCLT) on Wednesday directed the administrator of Dewan Housing Finance (DHFL) to present the settlement offer of the non-banking financial company’s ousted promoter Kapil Wadhawan before the creditors for their consideration.
The tribunal, in an oral order, has asked the RBI-appointed administrator of DHFL to present the settlement plan to the committee of creditors (CoC). The CoC has been given 10 days to consider the offer.
The direction from NCLT comes as a surprise to DHFL’s lenders who have approved a bid of Rs 34,250 crore from Piramal Capital and Housing Finance (PCHFL) for the troubled mortgage lender. DHFL is a test case of resolution under the Insolvency and Bankruptcy Code (IBC) as it was first NBFC to be referred to NCLT in 2019.
Wadhawan’s settlement offer to the CoC in 2020 was rejected by the lenders. He had proposed to repay lenders by selling assets.
Wadhawan had earlier proposed a settlement plan of Rs 91,158 crore, claiming he would repay 100% of the principal to all the creditors. However, the lenders had rejected this offer citing legal advice obtained by them. Later, in November 2020 Kapil Wadhawan moved NCLT against the rejection of his resolution plan by the CoC.
In his Rs 91,158-crore offer, Wadhawan had promised to make an upfront payment of Rs 9,000 crore and to service Rs 31,000 crore of debt in seven years at 8.5% per annum. Besides, he had offered to repay Rs 12,000 crore within a period of seven years at 11.5% per annum, following a one-year moratorium.
The plan also included repayment of Rs 18,000 crore in five years at 11% per annum, following a five-year moratorium. Loans worth Rs 5,000 crore were to be converted to equity, while Rs 16,158 crore was to be converted into zero coupon bonds. Kapil Wadhawan also claims he will fully pay non-convertible debenture (NCD) holders and fixed deposit (FD) holders of DHFL.
Ashish Pyasi, associate partner, Dhir and Dhir Associates, said if the promoters have the wherewithal to fulfil their promise under the proposal and the CoC is willing to accept the same, this will lead to maximisation of the value of assets. Pyasi added the CoC could consider the proposal as per commercial wisdom or move a higher appellate tribunal to challenge the order.
DHFL has been undergoing insolvency proceedings at NCLT in Mumbai since December 3, 2019. Before it was admitted to the NCLT, the Wadhawans were in discussion with lenders to resolve the company as per June 7 circular of RBI. Later, the regulator superseded DHFL’s board and referred it to NCLT for resolution. DHFL has admitted claims of Rs 87,120 crore.
State Bank of India (SBI) is the lead creditor with claims of Rs 10,083 crore. NCLT Mumbai will hear the matter next on May 31.
Bondholders have claimed Rs 45,550 crore while financial creditors have sought Rs 41,342.23 crore from the mortgage lender. Emails sent to DHFL administrator, Piramal and State Bank of India did not elicit any response till the time of going to press.