NCLT ad­mits DHFL for in­sol­vency pro­ceed­ings

Business Standard - - FRONT PAGE - SUBRATA PANDA

The Mumbai Bench of the Na­tional Com­pany Law Tri­bunal (NCLT) on Mon­day ad­mit­ted the in­sol­vency plea moved by the Re­serve Bank of In­dia (RBI) against De­wan Hous­ing Fi­nance Cor­po­ra­tion (DHFL) for de­fault­ing on in­ter­est pay­ments for ex­ter­nal com­mer­cial bor­row­ing taken by it from State Bank of In­dia.

The Mumbai Bench of the Na­tional Com­pany Law Tri­bunal (NCLT) on Mon­day ad­mit­ted t he in­sol­vency plea moved by the Re­serve Bank of In­dia (RBI) against De­wan Hous­ing Fi­nance Cor­po­ra­tion (DHFL) for de­fault­ing on i nter­est pay­ments for the ex­ter­nal com­mer­cial bor­row­ings (ECBS) availed by it from State Bank of In­dia (SBI).

DHFL is the first fi­nan­cial ser­vices firm that will un­dergo in­sol­vency pro­ceed­ings at the NCLT af­ter the gov­ern­ment no­ti­fied the fi­nan­cial ser­vices in­sol­vency law on Novem­ber 15.

DHFL had availed of the ECB from SBI to the tune of $240 mil­lion in two tranches of $110 mil­lion and $130 mil­lion, re­spec­tively. It de­faulted on an in­ter­est pay­ment of $2.16 mil­lion, which trig­gered in­sol­vency pro­ceed­ings against the be­lea­guered mort­gage lender.

DHFL has also de­faulted on re­pay­ments to non-con­vert­ible deben­ture ( NCD) hold­ers in July.

SBI is the main fi­nan­cial cred­i­tor against DHFL. Although, the NCLT ad­mit­ted the in­sol­vency pe­ti­tion against DHFL , the tri­bunal raised con­cerns that there was no­body to op­pose the RBI’S pe­ti­tion and ob­served that the erst­while man­age­ment was ab­sent as the board had been su­per­seded by RBI. The Bench was also up­set that the ad­min­is­tra­tor was not present in court to an­swer its ques­tions. The RBI su­per­seded the board of DHFL on Novem­ber 20 and ap­pointed R Subra­ma­ni­aku­mar, former man­ag­ing di­rec­tor (MD) and chief ex­ec­u­tive of­fi­cer of In­dian Over­seas Bank, as the ad­min­is­tra­tor of the mort­gage lender. The RBI also ap­pointed a three-mem­ber ad­vi­sory com­mit­tee to as­sist the ad­min­is­tra­tor com­pris­ing IDFC First Bank NonEx­ec­u­tive Chair­man Rajiv Lall, ICICI Pru­den­tial Life

In­sur­ance MD N S Kan­nan, and As­so­ci­a­tion of Mu­tual Funds in In­dia Chief Ex­ec­u­tive N S Venkatesh.

DHFL’S li­a­bil­i­ties are to the tune of ~92,715 crore, of which se­cured loans are ~73,833 crore and un­se­cured loans are ~18,881 crore as of Septem­ber 2019.

Now af­ter ad­mis­sion of the mat­ter, the ad­min­is­tra­tor, who will func­tion as the res­o­lu­tion pro­fes­sional, will call for all the claims from cred­i­tors and a com­mit­tee of cred­i­tors will be con­sti­tuted. The tri­bunal has also asked the ad­min­is­tra­tor to be present for the next hear­ing of the mat­ter.

The RBI, last week, moved the NCLT to ini­ti­ate in­sol­vency pro­ceed­ings against DHFL.

DHFL had availed of an ECB from SBI to the tune of $240 mil­lion in two tranches of $110 mil­lion and $130 mil­lion, re­spec­tively

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