63 moons technologies has approached the National Company Law Appellate Tribunal (NCLAT) against the Dewan Housing Finance Ltd (DHFL) resolution plan approved by National Company Law Tribunal (NCLT). Seeking interim protection from the Tribunal, 63 moons in its plea alleged that the Piramal group’s resolution plan will help it reap benefit of recoveries from promoters.
While agreeing to hear the plea, the NCLAT has issued notices to committee of creditors (CoC), the administrator of DHFL and Piramal Capital. 63 moons, holds non-convertible debentures (NCD) of around Rs200 crore of DHFL.
Last month, the Mumbai bench of the NCLT had approved the Piramal group’s resolution plan for DHFL subject to to the outcome of the appeal in the NCLAT and the Supreme Court.
In its plea, 63 moons contented that the recoveries from the promoters should be payable to creditors. It also alleged that "Piramal's resolution plan will help the buyer to reap benefit of recoveries from promoters of DHFL. The resolution plan is malafide and will reach to unjust enrichment of Piramal."
Piramal Capital and Housing Finance (PCHFL) has already received approval from the Competition Commission of India (CCI) and Reserve Bank of India (RBI) for its Rs34,250-crore bid to take over DHFL. In January this year, the CoC had voted in favour of selling DHFL to the Piramal group under the bankruptcy process.
As Moneylife pointed out FD and NCD-holders are the biggest lenders to DHFL at Rs45,000 crore and they represent the savings of ordinary people. Another Rs35,000 crore is owed to commercial banks; but they dominate the CoC and will influence the outcome.
The losses, even after a successful sale, are massive-over Rs52,000 crore. Other than those who invested up to Rs2 lakh (who will get back their entire principal, not interest), the FD-holders stand to lose 75% of their investment, while those with secured NCDs will lose 60%.
Moreover, under the Piramal plan, any money recovered from the Wadhawans will go to the DHFL while financial creditors will get nothing. In effect, whichever bid is accepted, it seems like a raw deal for FD and NCD-holders who include individuals, trusts, pension funds and companies who went by the AAA credit rating (highest) accorded by rating agencies to the DHFL group, despite plenty of talk about their shady dealings.
Unlike insolvency proceedings for companies from other sectors, a financial services-provider (FSP) creditor or debtor cannot approach the tribunal without being referred by a regulator. DHFL is the first FSP to be sent to the bankruptcy tribunal after the government notified the rules for referring FSPs on 15 November 2019.
Last week, hearing a public interest litigation (PIL) filed against the Securities and Exchange Board of India (SEBI) in the DHFL matter, a bench of chief justice Sanjib Banerjee and justice Senthilkumar Ramamoorthy of the Madras High Court (HC) issued notice to the market regulator. In his petition, Ranganathan V (the petitioner and Moneylife
columnist) has said that SEBI, credit rating agencies, auditors and others were lax in performing their role, i.e., to vet DHFL's functioning, due to which investors lost money in excess of Rs40,000 crore. (Read: DHFL Case: Madras High Court Issues Notice to SEBI on a PIL