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Home / Industry / Banking /  DHFL creditors, depositors reject new distribution plan

Mumbai: The committee of creditors (CoC) to Dewan Housing Finance Corp Ltd (DHFL) has rejected a proposal to increase recoveries for smaller investors, including fixed deposit holders, by an overwhelming majority of 89.19%, documents showed.

Interestingly, the proposal was also rejected by depositors who have a voting share of 6.18%. This means they are now likely to receive 1,241 crore or 23% of their total claim of 5,299 crore. DHFL’s committee of creditors voted on a proposal to approve an additional 966 crore for FD holders from the recoveries made.

Lenders also put to vote proposals to distribute 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.

Going by the outcome of this voting, none of them would receive any additional funds. Of the 75 votes, only eight supported the proposal, while 52 votes were polled against, and 15 abstained. Among those that voted against are State Bank of India (SBI), Bank of India, National Housing Bank, Union Bank of India, Canara Bank, Central Bank of India, among others.

Had it been approved, secured financial creditors such as banks would have had let go of 1,853.2 crore or 5.4% of the total resolution value. The thee-voting window remained open from 2 AM on 20 June to 9 PM on 22 June.

Revisions in the distribution mechanism were proposed 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.

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.

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