DHFL resolution sees stakeholders tussle

MUMBAI: The resolution of Dewan Housing Finance Corp. Ltd (DHFL) is witnessing growing tussle between its bondholders and fixed depositors, both seeking priority in recovering their investments, said two people aware of the development, requesting anonymity.

The debate intensified on February 20, when DHFL’s committee of creditors (CoC) met with representatives of both sides demanding preferential treatment. According to the first person, the administrator informed the CoC that depositors were looking for repayments for matured deposits and premature withdrawals in cases of medical emergencies.

“Fixed deposit holders’ representative presented that since many of these depositors are senior citizens and need money for medical purposes, their money should be repaid first,” the person said, adding that the legal counsel for creditors said that during the moratorium under the Insolvency and Bankruptcy Code (IBC), no creditor can be repaid.

Since depositors and bondholders form a sizeable chunk, they are represented in the CoC. At present, the RBI-appointed administrator has admitted claims of ₹86,374 crore from all classes of creditors. Of this, ₹5,207 crore is from over 66,000 fixed depositors, and ₹81,140 crore from banks and bondholders led by Catalyst Trusteeship Ltd (CTL), acting as their custodian.

“The representative for bondholders said there should be no differentiation between a retail FD holder and a retail bond investor and any exemption should apply to both,” the first person said, adding that the CTL representative also pointed out that a large number of bondholders are facing difficulties as well, and are also small retail investors akin to FD holders. “Hence, a distinction along such lines cannot be made,” he said.

The problem for over 66,000 FD holders is absence of security for FDs, unlike secured bondholders. They have only about 6% voting right in the CoC, and are, therefore, unlikely to radically change the direction of the proceedings of the committee.

DHFL BONDHOLDERS, FIXED DEPOSITORS ARE SEEKING PRIORITY IN SEEKING THEIR INVESTMENTS