DHFL insolvency case: NCLT appoints panel to oversee resolution plan

The National Company Law Tribunal (NCLT), while approving the resolution plan of Piramal Group for Dewan Housing Finance Limited (DHFL) has named a seven-member supervision committee, which will be given the power to manage and control the beleaguered housing financier during the period between the approval of the plan and its implementation.
 
The panel will have three representatives from the committee of creditors (CoC), two representatives nominated by the Piramal Group, and the administrator, provided that if the administrator has not provided his consent in this regard, then an insolvency professional or an industry expert as nominated by the Piramal Group in consultation with the CoC and EY.

 
In addition, the bankruptcy tribunal will appoint an observer-cum-permanent invitee in the monitoring committee to ensure smooth functioning and change over to the successful resolution applicant.  NCLT has appointed Ashok Kakkar, (Retd.) chief commissioner of Income Tax, former executive director, Sebi. “As per the plan, the costs and expenses which may be incurred by the monitoring committee in discharging their duties as set out above till the implementation date shall be funded from the cash flows of the corporate debtor,” the NCLT written order said.
 

The Mumbai bench of the NCLT approved Piramal Group’s resolution plan for the beleaguered DHFL on June 7. The plan put forward by Piramal Group, which has offered to pay Rs 37,250 crore, has been approved by the CoC, the Reserve Bank of India (RBI), and the Competition Commission of India (CCI).

 
While the bankruptcy tribunal approved the overall plan, it had asked for reallocating funds to fixed-deposit holders and small investors. That said, it did not send the plan back to the CoC; rather, it has said the final decision is left to the lenders.
 
“With regard to the decision on distribution to public depositors, fixed deposit holders, subscribers to NCDs, we also suggest, request the CoC to reconsider their grievances, plights and they did not oppose the resolution plan and their request is only to enhance the percentage of payment made in the plan and the same should be increased to the level of secured financial creditors i.e. approximately 40 per cent the financial creditors would be getting in this plan,” the NCLT order said.

 
According to the resolution plan, of the total consideration of Rs 37,250 crore, Rs 14,700 crore is upfront payment, cash recovery, of which Rs 4002 crore is brought in by the Piramal Group and balance Rs 10,968 crore is cash balance available with DHFL as on 31.03.2021, and Rs 19,550 crore is debt securities (NCD) issued to CoC members with coupon rate of 6.75 per cent.