The dedicated bankruptcy court has allowed an extension of 90 days for the Corporate Insolvency Resolution Process (CIRP) of Dewan Housing Finance Corporation (DHFL).
This means the lenders of the company have now time until January 5, 2021, for coming up with the revival plan for the company.
The Mumbai bench of the National Company Law Tribunal (NCLT) has allowed the extension for the resolution process of the company and has also allowed the administrator’s plea for the exclusion of the time of lockdown from the CIRP process.
“This bench is of the conscientious view that the present application is bona fide and grounds submitted for the exclusion and extension of CIRP period are genuine for the completion of CIRP and CoC also passed a resolution with 97.7% vote share,” said judicial member Janab Mohammed Ajmal and technical member Ravikumar Duraisamy in their order of October 14.
The administrator of the DHFL, R Subramaniakumar informed the tribunal that the central government had imposed the lockdown from March 25 till May 31, 2020. However, in Maharashtra, the lockdown was extended until July 31, 2020, and therefore a period of 129 days should be excluded from the CIRP process.
“Hence, the CIRP period of the Corporate Debtor which was to expire on May 31, would now end on October 7,” argued the administrator of the DHFL. “The present application is filed for an extension of CIRP period by 90 days i.e. up to January 5, or such period excluding the period of lockdown under Section 12(2) of the Insolvency and Bankruptcy Code (IBC).”
According to Ashish Pyasi Associate Partner Dhir & Dhir Associates, this is another example of the pragmatic approach taken by the hon’ble tribunal to enable the affected process to achieve the objective of the code of maximisation of value of assets.
“This will give additional time to the administrator and will help in taking the process to a more fruitful end for all the stakeholders,” says Pyasi
The troubled home financier has been in a liquidity crisis for over a year. Last year, on November 20, the RBI had superseded its board and placed it under an administrator. Subsequently, the central bank appointed a three-member advisory committee comprising Rajiv Lall, executive chairman of IDFC First Bank; NS Kannan, MD of ICICI Prudential Life, and NS Venkatesh, CEO of the Association of Mutual Funds in India.
When the tribunal admitted the RBI’s plea, DHFL owed over Rs 83,800 crore to banks, the National Housing Board, mutual funds and bondholders. Of this, about Rs 74,000 crore was secured, while over Rs 9,800 crore was unsecured.
With the RBI’s announcement of the insolvency resolution process for DHFL, an interim moratorium on all claims on the company also kicked in.