In a welcome relief, lenders to Dewan Housing Finance Corporation (DHFL) may start receiving payment from Piramal Capital and Housing Finance (PCHFL) this week. DHFL has been undergoing insolvency proceedings at National Company Law Tribunal (NCLT) in Mumbai since 3 December 2019.
According to sources, while State Bank of India (SBI) is said to have signed a transaction document on Monday evening, the other lenders, including Union Bank of India, Bank of India, Bank of Baroda and Canara Bank, may sign the transaction document soon. Financial creditors, including the debenture trustees of the DHFL bonds, Catalyst Trusteeship, and IDBI Trusteeship Ltd, are also expected to sign the papers soon.
The resolution plan involves Piramal Capital taking over DHFL and making payments to lenders—which can be implemented in full only after 90% of the financial creditors sign the execution documents.
If the money is transferred by this week, it will reflect in the banks’ September quarter earnings (Q2FY21-22). Banks had earlier written off their entire debt to DHFL.
In a regulatory filing, Piramal Enterprises had said that total consideration of Rs34,250 crore for DHFL included Rs14,700-crore upfront cash and non-convertible debentures (NCDs) of Rs19,550 crore. The NCLT-approved plan shows 93.65% of financial creditors voted in favour of Piramal Capital & Housing Finance’s Rs37,250 crore resolution plan.
With a total consideration of Rs34,250 crore, Piramal’s resolution plan approved in January 2021 will enable lenders to recover around 40% of their dues, out of the total admitted claims at Rs87,082 crore.
To conclude the transaction by this month-end, financial creditors agreed to set aside Rs2,350 crore of claims made by the National Housing Bank (NHB) for DHFL until a dispute over the distribution of proceeds is resolved. NHB has claimed that it has the right to receive the proceeds of DHFL on a preferential basis; however other financial creditors have disagreed.
Of the Rs37,250 crore offered to creditors, Rs12,700 is upfront cash payment; Rs3,000 crore of interest income earned by DHFL during the corporate insolvency resolution process (CIRP) and Rs19,550 crore in the form of 6.75% non-convertible debentures due 2031 with an option to repay after five years, according to the resolution plan.
According to the NCLT order, PCHFL was required to make payments to creditors by 5th September—within 90-days of approval from NCLT. However, this was delayed initially, with NCLT also ordering the committee of creditors (CoC) to consider higher payment to fixed deposit-holders. Later, 63 moons technologies ltd questioned the legality of Piramal’s resolution plan.
Meanwhile, the enforcement directorate (ED) has arrested Vinod Chaturvedi, managing director of Usher Agro Ltd and other group companies under PMLA (Prevention of Money Laundering Act) in a case related to cheating and siphoning of bank loan Rs915 crore. He had allegedly done bogus transaction with 15 shell companies and with DHFL group companies.
Separately, a special court of Central Bureau of Investigation (CBI) in Mumbai on Saturday denied bail to Yes Bank founder Rana Kapoor’s wife Bindu and two daughters, Roshni and Radha, in a quid-pro-quo case involving DHFL.
The special court refused to grant them bail stating that prima facie loss of Rs4,000 crore was caused to the bank through illegal acts. The court, which remanded them in 14-day judicial custody, said the three did not deserve any sympathy for being women or the mother of small kids.
In their bail pleas filed separately in Bombay High Court, Bindu Kapoor, Roshni Kapoor and Radha Kapoor Khanna, who are currently lodged in Byculla women’s prison here, sought for the CBI court order to be quashed and set aside, as it was grossly illegal and untenable.