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Wednesday, June 16, 2021

DHFL administrator, lenders appeal against Wadhawan offer order

A May 19 order of the National Company Law tribunal (NCLT) had directed the administrator to place the settlement offer of the firm’s jailed promoter Kapil Wadhawan before the committee of creditors

By: ENS Economic Bureau | Mumbai |
May 25, 2021 3:28:53 am
The administrator and the lenders of DHFL in two separate pleas asked the NCLAT to dismiss the NCLT order and said the order can disrupt the strict timelines under the insolvency code.

The administrator of Dewan Housing Finance Corporation (DHFL) and its lenders have moved the National Company Law Appellate Tribunal (NCLAT) against the May 19 order of the National Company Law tribunal (NCLT), which had directed the administrator to place the settlement offer of the firm’s jailed promoter Kapil Wadhawan before the committee of creditors (CoC), and has asked the CoC to consider the proposal within 10 days.

The administrator and the lenders of DHFL in two separate pleas asked the NCLAT to dismiss the NCLT order and said the order can disrupt the strict timelines under the insolvency code. The administrator has also said the CoC is being compelled to vote on Wadhawan’s “flimsy” settlement proposal against its commercial wisdom. In its petition to the NCLAT, the administrator has also questioned the timing of the NCLT order as the term of the bench that passed the order is coming to an end in the first week of June.

“…the present bench’s term is scheduled to expire on or around the first week of June 2021, and any delay could result in all the above having to be re-argued, jeopardising the chances of a successful and timely resolution of the CIRP. It is at such a belated stage the adjudicating authority passed the impugned order (May 19)…” said the administrator.

It said the NCLT’s order is in “conscious disregard of judicial economy. The petition said the NCLT has unconditionally accepted Wadhawan’s proposal, which is “without any financial backings” and has been only put forward to stall resolution process.

The administrator also said that Wadhawan had sent the proposal to the Reserve Bank of India (RBI) but the regulator chose not to act on it. According to the petition, Wadhawan is ineligible to submit a plan as DHFL’s account has been classified as “fraud” due to his conduct. It said that preferential transaction applications worth Rs 45,000 crore are pending against Wadhawan and lenders have invoked personal guarantees given by him. The RBI, the CoC and the Competition Commission of India (CCI) have already approved the Rs 37,250 resolution plan offered by Piramal Enterprises. However, the NCLT is yet to give its nod to the plan.

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