DHFL lenders looking at repayment plan for 55,000 FD holders2 min read . Updated: 17 Nov 2020, 04:30 PM IST
- They are looking different scenarios for distributing the proceeds of the funds received from the new investor. This includes distribution under the waterfall mechanism or under pari passu distribution mechanism or setting aside some amount of the outstanding claims for small investors.
Mumbai: Lenders to troubled Dewan Housing Finance Ltd (DHFL) are looking at a repayment strategy for the 55,000 FD holders as part of the resolution plan.
According to the minutes of the meeting held last week, the committee of creditors (CoC) is looking at different scenarios for distributing the proceeds of the funds received from the new investor. This includes distribution under the waterfall mechanism or under pari passu distribution mechanism or setting aside some amount of the outstanding claims for small investors. Mint has reviewed a copy of the minutes of the meeting of CoC which was held last week.
The revised distribution mechanism and resolution plan submitted by all bidders will be put up for voting at the CoC meeting today.
According to the minutes, most lenders favour a distribution plan where the CoC sets aside 5% of the claim amount for small investors with investment up to ₹10 lakh, unsecured financial creditors and operational creditors, with the remaining resolution amount being distributed under the waterfall mechanism.
The consensus of all CoC members is not final as lenders remain divided over how much amount should be allocated to unsecured financial creditors which represents a small portion of CoC voting share. Catalyst Trusteeship Ltd (CTL) which represents retail bond holders of DHFL said that unsecured financial creditors are unlikely to oppose the distribution mechanism as there is some amount set aside for them.
“The legal counsel further discussed certain legal precedents with respect to distribution mechanism in other IBC cases and mentioned that Section 53 of the Code provides a base principle for manner of distribution but CoC in its commercial wisdom and discretion can provide for different manner of distribution as long as the key legal principle of equity are not violated and other mandatory contents of Section 30 of the Code are complied with," said the minutes of the meeting.
According to the minutes, the representative on behalf of the FD holders on the other hand requested the CoC to consider payment of the entire claim amount of FD holders on socio-economic grounds or upfront payment of the amount set aside.
It also said that in the event the distribution mechanism and the resolution plans are put to vote together and the resolution plan is approved by the CoC, but the distribution plan is not approved, then the lenders will follow the waterfall distribution mechanism.
Last week DHFL’s CoC had received revised bids from Adani Group, Piramal Enterprises, US-based Oaktree Capital and Hong Kong-based SC Lowy to either buy a stake in the company or buy out its assets.
Oaktree Capital raised its bid for the entire portfolio to ₹31,000 crore from ₹28,000 crore earlier, while Piramal Enterprises raised its bid for the retail portfolio to ₹26,000 crore from ₹15,000 crore earlier. Adani has offered ₹2,700 crore for the wholesale and SRA book (which comprises loans to projects being developed for Slum Rehabilitation Authority) compared to ₹2,200 crore earlier, while SC Lowy has raised its bid for the non-SRA book to ₹2,300 crore from ₹1,500 crore earlier, the people said.