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(Photo: Reuters)
(Photo: Reuters)

DHFL lenders file personal insolvency case against Wadhawans

This recent move by DHFL lenders comes at a time when the resolution process for the mortgage financier is currently underway and lenders have called for a fresh round of bidding from existing bidders for the fourth time

Mumbai: Lenders to Dewan Housing Finance Corp Ltd have moved the Mumbai bench of National Company Law Tribunal (NCLT) to initiate personal insolvency proceedings against the erstwhile promoters Kapil and Dheeraj Wadhwan, according to a person aware of the matter.

DHFL owes 87,031 crore from financial creditors, including 39,000 crore from banks. "We will contact Catalyst Trusteeship Ltd (CTL) and see if they can join it or perhaps if they can ask banks to reduce their recovery in the resolution proportional to the recovery from Wadhawans if any," said one of the bondholders who spoke on condition of anonymity.

Union Bank of India, the lead bank has filed the case on behalf of all lenders against the entire exposure of 38,000 crore. Alvarez & Marsal has been appointed as the resolution professional (RP) in this matter.

This recent move by the lenders comes at a time when the resolution process for the mortgage financier is currently underway and lenders have called for a fresh round of bidding from existing bidders for the fourth time.

“The process to initiate insolvency proceedings started 2 months ago and the case was filed on Tuesday evening. The RP can invite other creditors to seek claims on their dues," said the person cited earlier.

In October, Wadhawan had proposed to pay more than 43,000 crore to all creditors without any haircut. Last week Mint had reported that Wadhwan had approached NCLT against the bankrupt mortgage lender’s administrator and the committee of creditors (CoC) over the bids made by the four suitors seeking to take over its assets.

He also requested the NCLT that he should be allowed to be a part of the CoC meetings as his plea to the administrator has not worked.

In an application made on 24 November, Wadhawan urged that the tribunal should not allow the bids received from the four bidders, Oaktree Capital, Piramal Enterprises, Adani Group, and SC Lowy, terming their offers “absurd".

Adani has made the highest offer among the bidders of 31,250 crore for buying DHFL’s entire business.

Wadhawan highlighted the efforts to ensure repayments to the creditors and the resolution plan offered by him without any haircut for the lenders to whom DHFL owes around 88,000 crore. The plea urged the bankruptcy court to direct that the resolution plan of DHFL be submitted to an independent expert appointed by NCLT along with the bids received from the four bidders.

Wadhawan appealed that until the hearing and the final disposal of the latest application, the tribunal should direct the administrator to give him access to all the documents and records of DHFL.

He has also urged the NCLT to ask the CoC and the administrator to defer the consideration on bids received from the four bidders until the hearing and the final disposal of the Wadhawan’s latest appeal.

Wadhawan, in a November letter to RBI-appointed administrator Subramaniakumar, had sought a second hearing from the lenders to reconsider the resolution proposal that he had submitted in October.

“Even today, I’m willing to stand by the principle of 100% repayment of principal amounts to all the creditors without any haircut as I do believe, from DHFL’s business, that such recovery is possible," Wadhwan said in the letter.

“As an additional incentive, I’m also willing for all the creditors, including the NCD and fixed deposit holders, to convert part of their debt into equity so as to enjoy the equity upside they will get once the company is revived and revitalized and the company commences business as normal," he said.

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