Tag: DHFL

PCHFL to raise up to ₹1,000 crore through NCDs

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Piramal Capital and Housing Finance Limited on Wednesday announced the issue of secured, rated, listed, redeemable, non-convertible debentures of the face value of ₹1,000 each.

“The Tranche I Issue has a base issue size of ₹200 crore with an option to retain over subscription up to ₹800 crore, aggregating up to ₹1,000 crore,” it said in a statement.

The Tranche 1 Issue opens on July 12, 2021, and closes on July 23, 2021 (with an option of early closure or extension).

Piramal ties up funds from Barclays Bank, Standard Chartered for DHFL buy

PCHFL, is a wholly-owned subsidiary of Piramal Enterprises Ltd. It is a non-deposit taking housing finance company, into wholesale and retail funding and is in the midst of acquiring Dewan Housing Finance Corporation Ltd (DHFL).

Rajesh Laddha, Executive Director and Group Chief Financial Officer, Piramal Enterprises Ltd said the funds raised will be used for retail disbursement. “The retail engine is in motion. We are getting more people and expanding branches,” he told reporters.

Despite the turmoil, DHFL buy is an opportunity for Piramal Group

Target market

Jairam Sridharan, CEO, Piramal Retail Finance said the focus of the business is on the retail segment in Tier 2 and 3 towns. This will get enhanced with the acquisition of DHFL. It is looking to focus on salaried and small business owners in these markets and offer them products such as two-wheeler and used-car financing.

Commenting on the implementation of the DHFL resolution, Laddha said that multiple things are being done. He also noted that there is no regulatory bar for Piramal Group or CoC to go ahead with resolution implementation.

“We are preparing a checklist where all issues will be sorted out. How the NCDs of ₹19,000 crore will be issued and allocated within the CoC to its members. Work is on at the CoC and Administrator’s end. There are small issues with regard to merger, getting DHFL equity and NCDs delisted,” he said.

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DHFL: Fresh round of voting by CoC on new distribution mechanism

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The Committee of Creditors of Dewan Housing Finance Corporation Ltd (DHFL) has initiated a fresh round of voting on a proposed new distribution mechanism.

Under the new proposal, unsecured financial creditors will be paid 40 per cent of their respective admitted claims, similar to the recovery of the secured financial creditors

The development comes after the National Company Law Tribunal held that the prayer sought by Axis Bank, YES Bank and L&T Finance to this end should be merged with the Resolution Plan Approval Order. It had also directed the Committee of Creditors of DHFL “to reconsider the distribution mechanism” for the applicants “as per its commercial wisdom”.

Sources said the Committee of Creditors met on July 5 to discuss the proposal. All other provisions of the original redistribution plan are the same.

“Between the approved distribution mechanism and the current proposed distribution mechanism, the incremental contribution by large secured FCs will be about ₹1,370 crore which is 3.64 per cent of the Resolution Plan Value,” said the proposal.

The recovery for fixed deposit holders would remain at about 23 per cent. They are expected to vote against the fresh proposal on the distribution mechanism.

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NCLAT to hear 63 Moons Technologies plea on DHFL

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The National Company Law Appellate Tribunal has agreed to hear the petition by 63 Moons Technologies challenging some of the provisions of the resolution plan for Dewan Housing Finance Corporation Ltd (DHFL).

63 Moons to challenge NCLT nod to Piramal’s DHFL buy

The NCLAT has refused to stay the resolution plan.

63 Moons holds over ₹200 crore of NCDs of DHFL. It had earlier said the current resolution plan is disappointing for NCD holders.

“Other members of the Committee of Creditors, who comprise mainly of banks, have recourse to personal guarantees of promoters whereas NCD holders do not have any such contractual recourse,” it further said, adding that NCD holders will be left high and dry with haircut of 65 per cent to 75 per cent if in future such recoveries from fraudulent transactions are allowed to pass through to the resolution applicants, instead of the creditors,” it had earlier said.

Wadhawan plans to challenge NCLT nod to Piramal’s resolution plan for DHFL

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Wadhawan plans to challenge NCLT nod to Piramal’s resolution plan for DHFL

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Kapil Wadhawan, former promoter of Dewan Housing Finance Corporation Ltd (DHFL), plans to challenge the approval by the National Company Law Tribunal to the resolution plan of Piramal Capital and Housing Finance Ltd.

Wadhawan’s counsel JP Sen informed the National Company Law Appellate Tribunal (NCLAT) about this on Friday.

Sen informed the tribunal that an appeal against the NCLT’s order on June 7 approving Piramal’s resolution plan will be filed in a day or two.

“Wadhawan is likely to file a petition challenging the NCLT order by Monday,” said a person familiar with the development.

Petitions filed by DHFL’s Committee of Creditors (CoC), Administrator and PCHFL came up for hearing before the NCLAT on Friday.

The NCLAT had on May 25 stayed an order by the NCLT, which had directed the lenders to consider the offer made by Wadhawan within a period of 10 days. The stay, which was an interim order, was based on a plea by the Committee of Creditors of DHFL challenging the NCLT order.

Appearing for DHFL administrator, the senior counsel said that since Piramal’s resolution plan has already been approved, the direction by the NCLT to the CoC can not survive.

Delay likely

The NCLAT has adjourned the matter for further hearing to August 2. But with Wadhawan planning to file a petition, the full resolution of DHFL could turn to be further delayed.

Wadhawan has also filed a plea in the Supreme Court challenging the NCLAT stay order.

Small depositors of DHFL, including fixed deposit holders and NCD holder 63 Moons Technologies, are also filing separate appeals for full repayment of their claims.

DHFL’s CoC had earlier this week rejected a plan for higher redistribution of funds to small deposit holders.

The NCLT had on June 7 approved the Piramal Group’s ₹37,250 crore resolution plan for DHFL. This includes an upfront cash component of ₹12,500 crore and a deferred component of ₹19,550 crore.

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CoC of DHFL vote against redistribution proposal

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The Committee of Creditors (CoC) of Dewan Housing Finance Corporation Ltd (DHFL) are understood to have voted against the proposal for redistribution of funds to small deposit holders.

Sources said a majority of financial creditors including fixed deposit holders have voted against the proposal.

This will mean that the current distribution pattern for DHFL will continue. The Committee of Creditors is expected to move the National Company Law Tribunal on June 24 to apprise it of the voting results.

NCLT recommendation

Based on the NCLT recommendation, the CoC had proposed higher distribution of funds to small investors including fixed deposit and NCD holders and pension funds.

According to the proposal, the entire admitted claim of ₹39 crore of Army Group Insurance Fund, ₹72.93 crore of Air Force Group Insurance Society and Navy Children School of ₹2.54 crore would be paid fully in cash.

Also read: DHFL lenders begin voting on proposals to redistribute funds

Further, it was proposed that all fixed deposit holders will be paid additional amounts in cash in order to ensure that the entire amount paid to them is about 40 per cent of the admitted claims, similar to the recovery to secured financial creditors.

Unsecured NCD holders with investments up to ₹10 lakh were proposed to be repaid 40 per cent of the admitted claims like in the case of fixed deposit holders.

The total outgo for lenders of DHFL on these proposals would have been ₹1,853.21 crore.

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DHFL lenders begin voting on proposals for redistribution of funds to small investors

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Lenders to Dewan Housing Finance Corporation Ltd have begun voting on new proposals for redistribution of funds to small investors, including fixed deposit and NCD holders as well as pension funds.

According to the proposal put forward for voting, the entire admitted claim of ₹39 crore of Army Group Insurance Fund, ₹72.93 crore of Air Force Group Insurance Society and Navy Children School of ₹2.54 crore will be paid fully in cash.

Further, it has also been proposed that all fixed deposit holders will be paid additional amounts in cash in order to ensure that the entire amount paid to them is about 40 per cent of the admitted claims, similar to the recovery to secured financial creditors.

Unsecured NCD holders have been categories based on their investments in four categories: up to ₹2 lakh, between ₹2,00,001 and ₹5 lakh, between ₹5,00,001 and ₹10 lakh, and those above ₹10 lakh.

Despite the turmoil, DHFL buy is an opportunity for Piramal Group

Unsecured NCD holders with investments up to ₹10 lakh will be repaid 40 per cent of the admitted claims like in the case of fixed deposit holders.

Investors not happy

The total outgo for lenders of DHFL on these proposals would be ₹1,853.21 crore.

However both NCD holders and fixed deposit investors of DHFL continue to be unhappy with the proposals. NCD holders up to ₹10 lakh believe that their repayment under the new proposal will be lower than before.

BSE, NSE to suspend trading in DHFL shares

The NCLT, while approving the resolution plan for DHFL on June 7, had asked the Committee of Creditors to reconsider the distribution of funds to fixed deposit holders and provident funds within two weeks, noting that they had deposited their hard-earned savings and are now facing difficulties amongst the Covid-19 pandemic and job losses.

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DHFL case: CoC decision on shareof FD holders can set a precedent

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Amidst the ongoing Covid-19 pandemic and job losses, the National Company Law Tribunal (NCLT) has asked lenders of Dewan Housing Finance Corporation Ltd (DHFL) to reconsider the distribution of funds to fixed deposit holders and provident funds within two weeks.

Considering the number of small investors and senior citizens who had deposited their hard-earned money and who now face a financial crisis due to the pandemic, the Resolution Plan should provide for an increased share for them, the NCLT said in its order dated June 7.

“It’s generally considered that the investment in the fixed deposit, NCDs are low-risk investment [compared with investing in equity shares]. Therefore, these small investors should not be put to more risk, take more hair cut than the stronger financial institutions viz banks, financial institutions.

“Accordingly, for this limited purpose, we direct the Committee of Creditors (CoC) to reconsider their distribution method amongst various members of the CoC within two weeks from today and report the same to this Adjudicating Authority,” the NCLT said.

Legal experts said that the NCLT has only made a request to the CoC and the final decision will be taken by the lenders. “If CoC agrees to give more to the FD holders, then it could set a precedent for other insolvency cases,” said a legal expert.

Nakul Sachdeva, Partner, L&L Partners (formerly Luthra & Luthra Law Offices), said it seems that the NCLT, on compassionate grounds, has requested the CoC to reconsider the distribution of funds while holding that the plan is in accordance with the law.

However, many of the fixed deposit holders and the NCD holders plan to appeal in the National Company Law Appellate Tribunal seeking full recovery of their deposits.

While approving the resolution plan for DHFL, the NCLT, however, made it clear that there is no additional monetary obligation for the Piramal Group to pay anything more than what it has committed in the Resolution Plan, which is ₹37, 250 crore. “It is only an inter se distribution of resolution money amongst various creditors,” the NCLT said. Significantly, the NCLT has also told the CoC to reconsider the claim of the Army Group Insurance Fund and pay the full admitted claim amount of ₹39 crore, which amounts to just 0.0001 per cent of the total plan.

Army group

The suggestion by the NCLT came “considering the nature of duties performed by them who are protecting the nation, sacrificing their lives, difficult working conditions and human service to keep peace of the country.”It would be appropriate for the members of the CoC “to reconsider and repay their entire admitted claim without any hair cut thereby expressing our deep concern, gratitude and respect to the Army Personnel,” it said.

The NCLT also noted that the Army Group did not challenge/oppose the plan and has only sought a sympathetic view of the CoC.

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63 Moons to challenge NCLT nod to Piramal’s DHFL buy

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63 Moons Technologies on Tuesday said it plans to challenge the order of the National Company Law Tribunal (NCLT) approving Piramal Group’s resolution plan for Dewan Housing Finance Corporation.

“63 Moons believes that the current resolution plan is contrary to law and against the interest of all DHFL’s creditors, including non-convertible debenture holders,” it said in a statement.

The move comes a day after the Mumbai Bench of the NCLT approved the Piramal Group’s ₹37,250 crore resolution plan for DHFL, subject to certain conditions.

NCD holders disappointed

63 Moons holds over ₹200 crore of NCDs of DHFL. It had earlier filed an application in theNCLT, Mumbai seeking that the fraudulent transaction recovery benefit of about ₹45,000 crore filed by the DHFL administrator should come to creditors, including NCD holders and not to the buyer of the company.

“The current resolution plan is disappointing for NCD holders in as much as they stand to bear the greatest loss as opposed to any other party involved. Other members of the Committee of Creditors, which comprise mainly banks, have recourse to personal guarantees of promoters whereas NCD holders do not have any such contractual recourse,” it added. The statement added that NCD holders will be left high and dry with haircut of 65-75 per cent if, in future, such recoveries from fraudulent transactions are allowed to pass through to the resolution applicants, instead of the creditors.

“63 Moons is awaiting for the copy of the order and will be reviewing its options on the basis of advice from its legal advisors,” it said.

Another challenge

Fixed-deposit holders of DHFL are also planning to challenge the NCLT order in NCLAT as they want 100 per cent re-payment.

63 Moons said the Resolution Plan is drafted in such a way that it favours the resolution applicant or Piramal Group.

“Ascribing a value of ₹1 to the recoveries of fraud where claims are in excess of ₹45,000 crore creates unjust enrichment of the buyer (Piramal) at the cost of creditors,” it said, adding that Piramal has bid only for the current value of DHFL, which does not include these amounts that were taken away fraudulently.

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NCLT clears Piramal’s resolution plan for DHFL

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After many a twist and turn, the debt resolution plan submitted by Piramal Group for Dewan Housing Finance Corporation Ltd (DHFL) has been finally approved by the National Company Law Tribunal.

DHFL is the first financial services company to get the NCLT nod under the insolvency process. The Committee of Creditors of DHFL had in January voted in favour of the resolution plan of Piramal Capital and Housing Finance Limited (PCHFL), a wholly-owned subsidiary of Piramal Enterprises Ltd.

According to the resolution plan, the total consideration for DHFL will be ₹37,250 crore, including an upfront cash payment of ₹12,500 crore and a deferred component of ₹19,550 crore.

“This is one of India’s largest IBC proceedings, and the very first in the financial sector. In that regard, it is an important and positive trendsetter. The approval from NCLT is a significant milestone in DHFL’s resolution and an affirmation of the sanctity of the IBC process,” a Piramal Group statement said.

Challenges ahead

According to sources, the Piramal Group is looking to complete the resolution process by August. However, it is likely to be delayed with many parties contemplating  approaching higher courts. DHFL’s erstwhile promoter, Kapil Wadhawan, has made an offer to take back control of the company and wants the top court to pass an order asking the CoC to vote on his proposal.

The NCLT’s Mumbai Bench, comprising HP Chaturvedi and Ravikumar Duraisamy, on Monday said the approval is subject to the Supreme Court decision on the petition filed by Wadhawan. The NCLT, however, dismissed a plea by Wadhawan, who had sought a copy of the successful resolution plan.

FD holders to move NCLAT

The other challenge could be from fixed deposit holders, who are demanding full payment under the debt resolution process. Vinay Kumar Mittal, a lead petitioner in the court on behalf of FD holders of DHFL, said they would be filing an appeal in the NCLAT. “We want 100 per cent payment. The moment the NCLT order is uploaded, we will be moving the NCLAT,” he told BusinessLine.

It is to be seen if other parties such as Wadhawan or 63 Moons Technologies take up a similar line of action.

Piramal Enterprises shares closed 1.87 per cent higher on the BSE at ₹1,960.75 a piece, while the DHFL scrip also rose  9.76 per cent to ₹20.8.

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DHFL reports net profit of Rs 96.75 crore in Q4

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Dewan Housing Finance Corporation Ltd reported a consolidated net profit of Rs 96.75 crore for the fourth quarter of 2020-21 as against a net loss of Rs 7,507.01 crore a year ago.

For the full fiscal 2020-21, it had a consolidated net loss of Rs 15,051.17 crore compared to a net loss of Rs 13,455.81 crore in 2019-20.

For the quarter ended March 31, 2021, DHFL reported a 22.4 per cent drop in its total revenue from operations at Rs 2,034.53 crore versus Rs 2,623.40 crore a year ago.

Total income also declined to Rs 2,060.57 crore for the fourth quarter last fiscal from Rs 2,160.98 crore a year ago.

“…the company has not made any provision for interest on borrowings amounting to Rs 1,91,213 lakh and Rs 7,65,155 lakh for the quarter and year ended on March 31, 2021, respectively, in view of the company’s current Corporate Insolvency Resolution Process (CIRP),” said the results.

Had the interest was accrued on borrowings and provided for, the profit for the quarter ended March 31, 2021 would have been lower by Rs 1,42,205 lakh (net of taxes) and the loss for year ended March 31, 2021 would have been higher by Rs 5,69,046 lakh respectively (net of tax), it further said.

As on March 31, 2021, it had a negative net worth of Rs 20,645.31 crore. Total assets amounted to Rs 70,358.66 crore while total liabilities stood at Rs 91,003.97 crore.

The investments and advance by way of unsecured Inter Corporate Deposit (ICD) including interest receivable aggregating Rs 4,109.24 crore are outstanding as on March 31, 2021. The provision for the entire ICD amount has been made due to lack of security.

Noting that DHFL has accumulated losses due to which its net worth has been fully eroded, the auditor’s note said that its ability to remain as a “going concern” depends on the outcome of the ongoing CIRP.

“During this quarter ended on March 31, 2021, additional transactions amounting Rs 12,73,574 lakh have been identified and reported by the company to Stock Exchanges and National Housing Bank and RBI as fraudulent, undervalued and preferential in nature,” it further said.

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