Kotak, Axis AMCS move HC over DHFL dues

Kotak Mutual Fund (MF) and Axis MF have joined the list of fund houses that have approached the Bombay High Court (HC) to recover dues from Dewan Housing Financial Corporation (DHFL).

“At Kotak MF, we are committed to take all actions that are necessary to protect our unitholders’ interests. Since the matter is sub-judice, we can’t talk about the merit of our action. We have full faith in our judiciary that they will protect the interests of retail investors,” said Rohit Rao, chief communication officer, Kotak Mahindra Group.

However, it couldn’t be ascertained at the time of going to press, whether pleas of both the fund houses were admitted by the court.

An email query sent to Axis MF didn’t elicit any response at the time of going to press.

Among other fund houses, Nippon India MF and Edelweiss MF have recently moved the HC pertaining to their dues related to DHFL debentures. According to industry sources, the legal route is the only option left for the fund houses as the norms laid down by Sebi allow fund houses to participate in a debt resolution plan if the stressed asset is already side-pocketed.

Sources add that banks are keen that MFS also join the inter-creditor agreement (ICA) framework for debt resolution of DHFL, but MF officials say they can’t join the resolution plan without an exemption from Sebi.

Since most fund houses were still in the process of meeting the criteria required for creating a side-pocket at the time of DHFL’S downgrade to belowinvestment grade (credit event) on June 5, it prevented them from participating in the ICA framework introduced by the Reserve Bank of India.

In its last hearing, the court allowed Edelweiss MF’S plea seeking disclosure of assets and liabilities of DHFL. The court also extended the injunction on DHFL from making repayments to either secured or unsecured lenders, until further orders. The court gave four weeks’ time to DHFL to file its reply. On Thursday, DHFL said that in light of the interim order granted by the HC, the firm has been unable to remit the funds collected to the assignee/buyer of the securitised/assigned pool, resulting in non-payment on the due date.