Wadhawan moves SC, wants lenders to consider bid for DHFL

By Ankur Mishra & Indu Bhan 

Kapil Wadhawan, the former promoter of Dewan Housing Finance (DHFL), on Tuesday moved the Supreme Court against a National Company Law Appellate Tribunal’s interim order that asked the lenders not to consider his settlement offer for now, as directed by the tribunal.

The NCLAT, on May 25, had stayed the NCLT Mumbai bench’s May 19 order directing lenders to consider a Rs 91,000-crore settlement offer from Wadhawan. The appellate tribunal had also directed NCLT to expedite the approval of the resolution plan submitted by lenders.

Wadhawan, who has repeatedly accused DHFL’s lenders of selling the company much below its fair value, told the SC the committee of creditors (CoC) acted completely against public interest and contrary to the objective of maximising the value by approving the Piramal group bid that is less than half the value offered by him in his second settlement proposal of December 29.

The offer had come when both the CoC led by Union Bank and RBI had, in January, approved the Piramal Group’s proposal to acquire DHFL. The Piramal group’s offer of Rs 37,250 crore to take over the company is awaiting consideration by the NCLT.

Wadhawan, who is facing charges of money laundering and diversion of bank funds, and is currently in jail, in his settlement offer had claimed he would fully repay all creditors.

The erstwhile promoter submitted that his proposal being “in public interest” would result in 100% payment of the liabilities of the secured creditors as well as other creditors like deposit holders, etc, whereas Piramal Capital and Housing Finance’s RP is resulting in an overall huge loss of more than Rs 53,000 crore to the nationalised banks and small depositors.

This “shows a complete misuse and subversion of the insolvency process of taking over a valuable company having an asset base of approximately over `68,000 crore for a discount of approximately Rs 37,000 crore,” the appeal stated.

Stating that his offer is 150% higher than the offer made by the successful resolution applicant, Wadhawan said that he was constrained to make the settlement proposal prior to the voting in view of abysmal bids being received for DHFL providing for a haircut of more than 60% to the creditors.

According to the appeal, “DHFL currently has a cash reserve of Rs 16,000 crore in addition to retail assets (i.e. loans given to small homebuyers) of approximately Rs 30,000 crore which are yielding interest at the rate of 10% and investments of approximately Rs 3,000-4,000 crore.”

Besides, the corporate debtor has a wholesale book (i.e. loans given to builders for development of project loans against property, etc) in excess of Rs 27,000 crore, it said, adding that despite the value available in DHFL, the lenders were offering the company to Piramal “on a platter at a huge discount”.

“A proposal which on the face of it is a farce and gives a benefit of thousands of crores to a private person at a corresponding loss to nationalised banks is sought to be approved in a most shocking manner,” he said, adding that the provisions of the IBC have to be applied fairly, transparently and in a non-discriminatory manner.

The lenders’ stand that his offer cannot be accepted as he was facing criminal proceedings cannot be used as a justification to cause an avoidable loss of over Rs 50,000 crore, Wadhawan said.