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Tuesday, December 10, 2019

NCLT admits RBI plea seeking insolvency resolution for DHFL

On November 20, the RBI superseded the board of directors of DHFL and initiated the bankruptcy proceedings “owing to governance concerns and defaults by DHFL in meeting various payment obligations”.

By: ENS Economic Bureau | Mumbai | Published: December 3, 2019 2:31:40 am
According to the insolvency rules, on the insolvency commencement date, the Adjudicating Authority should declare moratorium on all payments and transfer of assets.

The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday admitted the petition of the Reserve Bank of India (RBI) seeking bankruptcy proceedings to resolve the Rs 83,000 crore debt of Dewan Housing Finance Ltd (DHFL).

Admitting the petition, an NCLT bench said, “the petition deserves admission.”

On November 29, the RBI filed the insolvency resolution process against DHFL at NCLT for recovery of debt as DHFL had been defaulting on repayments. DHFL is the first company from the financial sector to be referred to the NCLT after the government recently notified the financial sector providers (FSP) insolvency rules. With the DHFL case now in the NCLT, an “interim moratorium will commence on and from the date of filing of the application till its admission or rejection”.

On November 20, the RBI superseded the board of directors of DHFL and initiated the bankruptcy proceedings “owing to governance concerns and defaults by DHFL in meeting various payment obligations”.

The RBI, which stepped in after the banks and the company failed to work out a resolution plan to bring the firm back on the rails, also appointed R Subramaniakumar, former MD and CEO of Indian Overseas Bank, as the Administrator to run the affairs of the company.

According to the insolvency rules, on the insolvency commencement date, the Adjudicating Authority should declare moratorium on all payments and transfer of assets.

There will be moratorium on the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority.

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