The committee of creditors (CoC) for Dewan Housing Finance (DHFL) will on Thursday meet to decide on the eligibility criteria for potential bidders for the beleaguered NBFC and also review the status of claims made by various parties.
At the last meeting held on December, 30, 2019, the Reserve Bank of India (RBI)-appointed administrator had sought the CoC’s nod for a set of transactions between DHFL and sister concern DHFL Advisory.
Persons close to the developments told FE, the administrator, R Subramaniakumar, was seeking the CoC’s nod since DHFL needed to continue to charge interest on some of the inter-corporate deposits (ICD). However, it is learnt that some lenders had raised objections to approving what are essentially related-party transactions, citing observations made by KPMG in its draft forensic audit report. KPMG is understood to have said in the report that there may have been a diversion of funds by DHFL. Bankers, therefore, would like to wait for the transactions to be verified before they approve them.
KPMG’s draft audit report had found that DHFL had disbursed loans to inter-connected entities with possible links to its promoters. These loans amounted to Rs 12,541 crore. DHFL also disbursed loans and advances totalling Rs 24,594 crore with inadequate loan documentation to 65 entities with minimal operations, the report said.
At the December 30 meeting, the administrator had sought to change the directors nominated by the board in DHFL’s subsidiary and step-down subsidiary. In addition, approval was sought to change the management of these subsidiaries. Emails sent to the DHFL administrator remained unanswered.
The troubled mortgage financier had received claims of Rs 92,404 crore so far from creditors, which included financial creditors, operational creditors, deposit holders along with employees and workmen.
NCLT, Mumbai, had admitted DHFL for insolvency resolution on December 2, 2019, after the RBI direction under Section 227 of IBC. Lenders initially tried to resolve DHFL’s stress as per the RBI’s prudential norms on stressed assets resolution. A resolution plan was then approved by DHFL’s board in September, which proposed a conversion of debt to equity, leading to lenders acquiring a 51% stake in the company.
Source: Financial Express, January 15, 2020