Tag: resolution plan

NCLAT declines to stay Piramal Capital’s approved resolution plan for DHFL, BFSI News, ET BFSI

Personal Finance

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“The matter is now settled. Nothing can upset it as the authorities demonstrated exemplary action in resolving this case,” said a senior banker, whose institution lent to DHFL.

New Delhi, July 23 () The National Company Law Appellate Tribunal (NCLAT) on Friday declined to stay the resolution plan of Dewan Housing Finance Corporation Ltd (DHFL) and its subsequent takeover by the successful bidder Piramal Capital & Housing Finance over the plea filed by 63 Moons Technologies. A two-member bench comprising its Officiating Chairperson Justice A I S Cheema and Member Alok Srivastava rejected 63 Moons Technologies’ plea to pass an interim order staying the resolution plan approved by the Mumbai bench of National Company Law Tribunal (NCLT).

Earlier on June 7, the NCLT had approved the resolution plan of Piramal Capital & Housing Finance Ltd for the debt-ridden DHFL and 63 Moons, which is a debenture holder of DHFL, filed a petition challenging it before NCLAT.

It had requested to stay the operations of the NCLT order, till the two appeals filed by it before the appellate tribunal is decided.

However, the NCLAT said: “We do not find that these are Appeals where interim order should be passed for grounds being raised by the Appellant.”

“If the averments made by Appellant (63 Moons) are juxtaposed with averments made by Respondents, we do not find it a fit case to pass interim orders as sought. We do not think that any interim order as sought with regard to Resolution Plan approved needs to be passed,” said the NCLAT.

63 Moons Technologies holds non-convertible debentures (NCDs) worth over Rs 200 crore issued by DHFL.

According to it, the resolution plan approved by NCLT is against the interests of the company’s NCD holders.

“The Learned Counsel for the Appellant argued that the execution of the Resolution Plan should be subject to the outcome of these Appeals. On July 6, 2021 itself, we have observed that it is a matter of law and we need not pass any specific orders. Both the Applications in both the Appeals stand disposed of accordingly,” the NCLAT said.

Earlier, on July 6, the NCLAT had issued notices to the lenders of DHFL and its successful bidder Piramal Capital & Housing Finance Ltd. KRH MKJ



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Authum’s RP chosen for Reliance Commercial Finance

Banking & Finance

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Lenders to Reliance Commercial Finance are understood to have selected Authum Investment and Infrastructure’s resolution plan of ₹1,585 crore as the successful bid.

According to sources, Authum’s plan had the highest net present value and received over 80 per cent of the votes.

The recovery for lenders is estimated to be ₹1,240 crore.

Reliance Commercial Finance also has additional cash and cash equivalent of over ₹250 crore as on June 30, 2021, which will be distributed along with plan proceeds, sources said.

Reliance Commercial Finance or Reliance Money is a 100 per cent subsidiary of Anil Ambani controlled Reliance Capital. It had a debt of about ₹9,017 crore. It offers small and medium enterprises loans, loans against property, infrastructure financing, agriculture loans, supply chain financing, micro-financing, vehicle loans and construction finance.

Authum Investment and Infrastructure is a registered NBFC involved in investments in shares and securities and has a net worth of over ₹2,400 crore as on June 30, 2021.

Earlier its bid of ₹2,911 crore for Reliance Home Finance had also been selected as the successful resolution plan by lenders.

The resolution of Reliance Commercial Finance is expected to help reduce the overall debt of Reliance Capital by over ₹9,000 crore.

Led by Bank of Baroda, lenders to Reliance Commercial Finance had in August 2020 initiated the resolution plan and had sought bids for the two companies. The process was run by Deloitte Touche Tohmatsu LLP as the resolution advisor.

Voting had started on June 7, 2021 and concluded on Thursday.

Apart from Authum, other bidders whose plans had been taken up for voting included UV ARC in consortium with Hawk Capital, Invent ARC and Alchemist ARC.

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NCLT clears Piramal’s resolution plan for DHFL

Banking & Finance

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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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As Covid-led bankruptcies loom, govt readies pre-packaged insolvencies, BFSI News, ET BFSI

Banking & Finance

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The government is likely to bring a pre-packaged insolvency resolution process across the board in light of an anticipated rise in bankruptcies due to the pandemic.

According to reports, the government is likely to start with micro, small and medium enterprises.

As bad loans are feared to top 13.5% of total advances due to the pandemic such a move has become urgent, experts said.

The government has been mulling the introduction of the provision for pre-packaged (pre-pack) corporate insolvency resolution plan wherein a restructuring plan would be agreed upon in advance between the company and its creditors.

In the Budget for 2021-22, Finance Minister Nirmala Sitharaman said the government will introduce alternative methods of debt resolution and a special framework for micro, small and medium enterprises.

What is pre-packaged insolvency?

Under the pre-packaged process, main stakeholders like creditors, shareholders and the existing management or promoter can come together to identify a prospective buyer and negotiate terms of a resolution plan, before submitting it to NCLT for formal approval.

Experts say it will help expedite the resolution process for stressed assets as well as reduce the number of insolvency-related cases before the National Company Law Tribunal (NCLT).

Last year, the corporate affairs ministry sought comments on pre-packaged resolution plans.

The pre-pack process will cut short time spent at the NCLT, and the consequent delay in implementation of a workable resolution plan.

Help for MSMEs

A sub-committee of the insolvency law panel had recommended making available pre-pack for all corporate debtors in a phased manner. It had highlighted its need for micro, small and medium enterprises, which have simpler structures and fewer liabilities than the large corporates.

Cut load, timelines

A pre-packaged insolvency resolution scheme would drastically reduce the timeline for the corporate insolvency resolution process thereby saving time, money and resources.

It would also cut the workload of overburdened NCLT significantly as there would be a reduction in unnecessary pleas from stakeholders during proceedings.

It will, in turn, have a positive effect on the value maximisation for the creditors.

Mounting cases

From December 1, 2016, till the end of September last year, total 4,008 CIRPs (Corporate Insolvency Resolution Processes) have commenced under the IBC.

Out of the total, 473 CIRPs have been closed on appeal or review or settled, 291 have been withdrawn, 1,025 have ended in orders for liquidation and 277 have ended in approval of resolution plans, as per data compiled by the IBBI.

Post the pandemic, there will be an urge to close the pending cases and there will be a significant increase in new stressed cases and introducing the pre-packaged IBC at this time will boost the economy and allow quick closure of the pending and upcoming cases.



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