NCLAT asks CoC to reconsider avoidance transaction terms of DHFL resolution plan
The National Company Law Appellate Tribunal (NCLAT) has asked the Committee of Creditors of DHFL to reconsider the term in the resolution plan that ascribing Re 1 value to Rs 40,000 crore worth of recoverable assets in the DHFL case.
The appellate tribunal passed the order in an appeal filed by 63 Moons, which had NCD of the face value of Rs 200 crore in DHFL. With this order, the CoC will have to now reconsider the provision of section 66 of IBC which mandates that the benefit should go to all the creditors of DHFL.
DHFL was acquired by Piramal Capital and Housing Finance Ltd, a subsidiary of Piramal Enterprises, for a consideration of Rs 37,500 crore as against the outstanding debt of Rs 85,000 crore.
63 Moons in a statement has said that the CoC had in its resolution plan overlooked this provision to the benefit of Piramal Group. “If CoC considers this without alteration of provision of section 66 of IBC, all creditors of DHFL will be benefited. 63 Moons is the only company which challenged the decision of CoC in NCLAT,” it said in the statement.
The NCLAT in its order said that the term in the Resolution Plan that permits the Successful Resolution Applicant to appropriate recoveries, if any, from avoidance applications filed under Section 66 of the Code ought to be set aside.
“The Resolution Plan be sent back to the CoC for reconsideration on this aspect,” reads the order.
In its resolution plan, Piramal had ascribed Re 1 value against Rs 40,000 crore assets that has been fraudulently diverted by erstwhile promoters of DHFL. With the recent order, lakhs of creditors will stand to benefit from this Rs 40,000 crore by way of recovery.
The NCLAT in its order rejected Piramal Group’s argument that the possibility of recovering monies from avoidance transactions is very low.
The tribunal observed that the amount of the actual recovery that may be made in the future is entirely irrelevant. “Since Piramal group has ascribed a value of INR 1 to the avoidance transactions, it has not factored in the avoidance transactions in the Resolution Plan amount. Moreover, there is no material on record to suggest that the avoidance transactions have been factored in the Resolution Plan. Therefore, the oral contention of the Respondents that the avoidance transactions have been factored in the Resolution Plan amount is unsupported and not borne out from the material on record,” reads the order.
Also read: Piramal Enterprises completes acquisition of DHFL; fully pays off creditors
