Lenders to Dewan Housing Finance Ltd (DHFL) and the administrator R Subramania kumar have filed two applications in the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT’s order which directed the committee of creditors (CoC) to consider an offer made by its former promoter Kapil Wadhawan within the next ten days.
Led by the Union Bank of India, the CoC in its application has asked NCLAT to set aside the 19 May order of the National Company Law Tribunal (NCLT). Further, the NCLT should also clear the resolution plan for the bankrupt DHFL, approving the deal with the Piramal Group.
The CoC in its petition said it categorically opposed the grant of any relief while making it clear that it had applied its mind to the second proposal (Wadhawan’s settlement offer) and taken a conscious decision that it did not want to accept the same.
The Administrator said that NCLT was fully aware that Wadhawan is also party to transactions worth about Rs 46,000 crore, which have been challenged as “fraudulent and/or otherwise wrongful under the Code (IBC), on the basis of reports submitted by an independent transaction auditor after a thorough transaction audit.”
Wilful defaulters, undischarged insolvents and promoters of defaulting firms are prohibited from participating in the resolution under Section 29A of IBC. Section 12A allows lenders to withdraw a company from bankruptcy proceedings, if 90% of the CoC supports the resolution. The withdrawal application has to be filed by the applicant who initiated the insolvency proceedings.
Legal experts say that if Wadhawan’s offer is considered under Section 12A of the IBC, the Reserve Bank of India (RBI) would have to file the withdrawal petition and justify why the case was brought to the NCLT and the regulator would also have to get bank guarantees in support of the proposal. RBI would need to procure a bank guarantee and 90% of the bankers need to vote in favour of the resolution.
“Before the case was taken to the NCLT, we had given Kapil Wadhawan ample opportunities to pay up. But that time he always put up his hands, pleading that he did not have the resources. Now that he is in the jail fighting multiple cases, from where will the money come from? So bankers have approached the NCLAT as there is no merit in this case. It is merely to derail the process of resolution, which was approved by the CoC,” said a banker on condition of anonymity.
Wadhawan, who is housed in the jail for money laundering, has come up with a settlement offer to pay up Rs 91,158 crore, much higher than Piramal Enterprises Ltd’s offer of Rs 34,250 crore. Piramal had offered upfront cash of Rs 14,700 crore, including cash on DHFL’s balance sheet, and a deferred component (non-convertible debentures) of Rs 19,550 crore.
The RBI in February cleared the Rs 34,250-crore acquisition of DHFL by the Piramal group after it outbid the US-based asset management firm Oaktree. Upon NCLT approving the plan, Piramal had intended to merge DHFL with its financial services business.
“We understand that the RBI has approved the DHFL resolution plan from Piramal Capital and Housing Finance, submitted by the CoC,’’ Piramal group had said in a statement in February.
