Tag: Kapil Wadhawan

Overseas assets of defaulters, guarantors may soon be within lenders’ reach, BFSI News, ET BFSI

Banking & Finance

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FILE PHOTO: An India Rupee note is seen in this illustration photo June 1, 2017. REUTERS/Thomas White/Illustration/File Photo

Lenders may soon be able to lay their hands on overseas assets of defaulting firms and personal guarantors.

The government has proposed adopting a global model law that will enable lenders to apply the Insolvency and Bankruptcy Code to defaulters’ assets lying overseas. These will include the offshore personal assets of the promoter if they have issued a personal guarantee. The changes would also allow the execution of orders against defaulters by overseas courts that have adopted the model law.

The model law is provided by the UNCITRAL — a subsidiary body of the United Nations.

The government has invited public comments on the proposed modifications by December 15.

The model law lays down the basic framework for cooperation between domestic and foreign courts and domestic and foreign insolvency professionals.

Personal guarantors

In the case of a personal guarantor, their ‘habitual’ place of residence will be taken into account to decide the jurisdiction where the main bankruptcy proceedings will happen. Debt recovery tribunals and the National Company Law Tribunal (NCLT) benches and their appellate tribunals are platforms where overseas creditors could initiate or participate in proceedings against personal guarantors in India.

The introduction of a cross-border insolvency law in the IBC, that is in line with international best practices and suitable for the Indian context, may be beneficial to all stakeholders. Draft part Z, as recommended by the insolvency law committee, is under consideration for enactment,” the ministry said, while proposing the additional measures regarding personal guarantors.

The changes were proposed after the ILC, constituted under the corporate affairs ministry to review the implementation of the IBC, noted the lack of a framework for cross-border insolvency. The government has decided to put in place a comprehensive framework for this purpose based on UNCITRAL model law on cross-border insolvency, which could be made a part of the IBC by inserting a separate chapter for this purpose.

In January 2020, the government had constituted a crossborder insolvency rules/regulations committee to recommend subordinate legislation.

Banks have approached the National Company Law Tribunal for invoking personal guarantees of promoters of 17 defaulting companies.

The defaulting promoters include those of Punj Lloyd, Amtek Auto, ABG Shipyard, Videocon, Varun Shipping, and Lanco, according to reports.

Armed with a Supreme Court order, banks are looking to invoke personal guarantees of tycoons from Venugopal Dhoot to Kapil Wadhawan to recover unpaid loans from their delinquent firms

The guaranteed debt

According to an estimate, the top 10 personal guarantors have guaranteed debt of over Rs 1.6 lakh crore. Among the big names, former promoters of Bhushan Steel and Power Sanjay Singhal and his wife Aarti Singhal had furnished personal guarantees worth up to Rs 24,550 crore to take loans from a consortium of bank led by State Bank of India.

The former promoter of Reliance Communications, Anil Ambani, has also given a personal guarantee against the loan taken. Erstwhile promoter Wadhawan stands guarantee to loans taken by DHFL, which is sitting on debt of about Rs 90,000 crore, while Dhoot has also given a personal guarantee to a portion of Rs 22,000 crore loan to Videocon.



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NCLAT stays NCLT order on DHFL

Banking & Finance

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In a relief to the ongoing resolution process of Dewan Housing Finance Corporation Ltd, the National Company Law Appellate Tribunal (NCLAT) has stayed an order by the National Company Law Tribunal (NCLT), which had directed the lenders to consider the offer made by Kapil Wadhawan.

The NCLAT heard the plea by the Committee of Creditors of DHFL challenging the May 19 order of NCLT on Tuesday.

Also read: DHFL lenders appeal against NCLT order on Wadhawan offer

Both the Committee of Creditors of DHFL as well as the Administrator had filed separate applications challenging the NCLT order to consider the offer made by its former promoter Kapil Wadhawan within the next 10 days.

Meanwhile, the Piramal Group on Tuesday also filed a separate appeal in the NCLAT challenging the NCLT order on DHFL.

The lenders termed Wadhawan’s proposal as flimsy, replete with misrepresentations, falsehoods, without financial backing or commitments, and tendered in disregard of the scheme of the insolvency code.

The administrator questioned the NCLT order’s timing given that the Bench is to retire in June and any delay could lead to a situation where the case would have to be re-argued before a new Bench. The application sought a direction from the NCLAT to the NCLT to pass an order on the offer by the Piramal Group within one week.

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Lenders likely to move NCLAT over DHFL

Banking & Finance

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Lenders to troubled Dewan Housing Finance Corporation Ltd (DHFL) are looking at various options and are expected to file an appeal with the National Company Law Appellate Tribunal (NCLAT) on Monday.

The move comes after the National Company Law Tribunal asked DHFL’s Committee of Creditors to consider the offer made by its former promoter Kapil Wadhawan within the next 10 days. In his second settlement offer, Wadhawan had offered ₹91,158 crore, which is over ₹50,000 crore more than the ₹34,250 crore is being offered by Piramal Enterprises.

Also read: Allowing Wadhawan to present settlement offer could derail DHFL resolution process: RBI

The Reserve Bank of India in its affidavit to the NCLT had said that permitting Wadhawan to make an offer for DHFL could derail the company’s resolution process. Bankers too are not in favour of such a move and have been left worried by the NCLT decision.

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DHFL: Wadhawan submits alternative proposal

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Kapil Wadhawan, the erstwhile promoter of Dewan Housing Finance Corporation Ltd (DHFL), has urged the Reserve Bank of India, the Administrator and lenders of the debt-ridden mortgage financier to properly consider his settlement proposal, which he contends is better than the bids submitted as part of the resolution process until now.

Also read: Last-minute hardsell: Bidders write to DHFL administrator

His latest letter on December 29 comes at a time when voting on the resolution plans has already begun with fierce competition amidst at least two bidders – Oaktree Capital and Piramal Capital and Housing Finance Ltd. Adani and SC Lowy, too, are in the race. Pointing to the bidding war between Oaktree and Piramal, Wadhawan in his letter has noted that there is a possibility of a potential litigation amongst the bidders.

“…despite such prejudicial contingencies, it is unfortunate that my settlement proposal does not seem to have been given any consideration whatsoever, though I am offering significantly more value than any of the current bidders – even more than the recent increase by Piramal,” Wadhawan said in the letter addressed to RBI Governor Shaktikanta Das, DHFL’s Administrator R Subramaniakumar and the Committee of Creditors.

Resolution plans by both Oaktree and Piramal amount to over ₹38,000 crore and lenders will look at various evaluation metrics for bidding.

Better than other bids

“You will appreciate that the alternative proposal that I have now made is significantly better than the bids made by any of the bidders by a wide margin. It is apparent that the bidders are offering no real value for the wholesale book and are seeking to retain for themselves the profits that they will earn through further retail lending,” Wadhawan further said. His revised offer also has a total value of ₹91,158 crore and provides for full repayment of the principal to all the creditors. Amongst other provisions, it includes ₹31,000 crore to be paid within a period of seven years in equal annual instalments with 8.5 per cent per annum interest.

Also read: Kapil Wadhwan tells DHFL administrator his offer is higher than revised bids

“…it will be apparent to all that not only is the proposal fully implementable but is also in the best interest of all the creditors, and will ensure the recovery of thousands of crores of public money,” he further said.

Under the proposal, with the conversion of a part of the debt to equity, banks will be the majority shareholders of DHFL and Wadhawan said he is willing for them to appoint a professional management and for him to act in the capacity of a consultant.

 

 

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