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Fixed deposit holders of Dewan Housing Finance Corp. Ltd (DHFL), who are on the verge of losing a large part of their savings, may get some relief, with lenders to the bankrupt mortgage lender contemplating a higher payout to FD holders from the firm’s insolvency proceedings.

DHFL’s committee of creditors (CoC) may approve an additional 966 crore for FD holders from the recoveries made, according to internal documents related to DHFL’s resolution plan reviewed by Mint. The proposal is subject to the outcome of voting this week and would entail money being redistributed between various categories of creditors.

As of date, FD holders have claims worth 5,299 crore, but will likely recover less than half of it.

If the additional payout is approved, FD holders will collectively receive 2,189 crore, taking the recovery for FD holders to 41.31%, from 23.08% at present.

Paras Jain/Mint
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Paras Jain/Mint


The FD holders have been fighting to recover their savings ever since the mortgage lender was admitted to the insolvency tribunal in December 2019. They have a 6.18% voting share in the CoC and have been opposing DHFL’s resolution plan, terming it discriminatory.

The latest development comes after the Mumbai bench of the National Company Law Tribunal (NCLT) suggested that creditors relook at the distribution of funds. On 7 June, the dedicated insolvency tribunal approved Piramal Capital and Housing Finance Ltd’s bid to take over DHFL for 37,250 crore. The tribunal said in its 7 June order that considering lakhs of small investors and senior citizens had deposited their savings, they should get a “fair" share of the resolution money.

Lenders have also proposed an additional 540 crore for unsecured non-convertible debenture (NCD) holders, 263.6 for small secured NCD holders. Others eligible for more funds than originally envisaged include the Army Group Insurance Fund, which will get 21.85 crore; the Navy Children School, which will get 1.95 crore; and the Air Force Group Insurance Society, which will get 56.09 crore.

Secured financial creditors such as banks will let go of 1,853.21 crore or 5.4% of the total resolution value.

“With regard to the decision on distribution to public depositors, fixed deposit holders and subscribers to NCDs, we request the CoC to reconsider their grievances... their request is only to enhance the percentage of the payment made in the plan," said the NCLT order cited above.

The tribunal, however, made it clear that the review was only with regard to the distribution of funds and did not concern the total resolution plan outlay. “We further make it clear that there is no additional monetary obligation for the successful resolution applicant to pay anything more than what it has committed in the resolution plan, an amount of 37,250 crore. It is only an inter se distribution of resolution money among various creditors," it said.

Piramal Capital had received approvals from the Competition Commission of India and the Reserve Bank of India for its bid to take over DHFL. Its resolution plan got 94% votes from DHFL’s creditors.

Mint reported on 8 June that Piramal group’s offer includes 12,700 crore in upfront cash, 3,000 crore in interest income on DHFL’s books and NCDs worth 19,550 crore to be repaid over 10 years.

shayan.g@livemint.com

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