DHFL resolution hits wall; bondholders to approach bankruptcy court
Published: Oct 18, 2019
By TIOLCorplaws News Service
MUMBAI, OCT 18, 2019: THE resolution plans of debt-laden shadow lender Dewan Housing Finance Corporation Ltd (DHFL) have hit a roadblock after the custodian of DHFL bonds yesterday took a decision to take the firm to bankruptcy court on behalf of certain debenture holders. Apart from banks, DHFL also owes money to about 87,000 bondholders.
The application was filed on October 16, 2019 in the Mumbai Debts Recovery Tribunal to claim Rs. 26,861 crore ($3.8 billion). The claim is for recovery of the amount of debentures outstanding, along with interest, for and on behalf of all debenture holders under all the three public issues.
The lenders are currently working on a resolution plan but the majority of its bondholders declined last month to be a party to that plan. The proposed plan involves the conversion of debt into equity for lenders and also includes giving them a 51 per cent stake in the company.
On Thursday, DHFL also filed delayed audited results for the quarter ended June 30 which showed it posted a net loss of Rs. 206 crore in the quarter compared with a profit of Rs. 435 crore in the corresponding period a year earlier.
The company's new auditor, KK Mankeshwar & Co, also raised concerns about the company's future. The auditor added that such developments had raised a significant doubt on the ability of the Company to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities including potential liabilities in the normal course of business. Further the auditor added that the loans might had been granted including terms and conditions, in a manner which was prejudicial to the interest of the company or its members.
The auditors also said that they could not get sufficient evidence to support the value of certain loans and added that they were unable to comment if certain loans had been properly secured.
