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Piramal Group likely to pay DHFL lenders this week

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Secured financial creditors will recover over 40 percent of their admitted claims with the implementation of the resolution plan, which is now in the final stages,

Piramal Group likely to pay DHFL lenders this week
Lenders to Dewan Housing Finance Limited (DHFL) are likely to be repaid their dues in accordance with Piramal Group’s resolution plan approved earlier this year, multiple people in the know told CNBC-TV18.
Secured financial creditors will recover over 40 percent of their admitted claims with the implementation of the resolution plan, which is now in the final stages, CNBC-TV18 has learnt. As of Monday evening, over 80 percent of the committee of creditors of DHFL had signed off on the execution documents for Piramal Group’s resolution plan, two people aware of the matter said. “The rest will also sign by Tuesday, and so the resolution plan will become effective with immediate effect,” said one of the people quoted earlier.
Piramal Capital and Housing Finance Limited’s (PCHFL) resolution plan, which was approved by the lenders in January and by the National Company Law Tribunal (NCLT) in June this year, can be executed only with the consent of at least 90 percent of the financial creditors. The largest lenders, including State Bank of India and Union Bank of India among others, signed the execution documents at the DHFL headquarters in Mumbai’s Bandra Kurla Complex area on Monday evening, CNBC-TV18 learnt.
“We aim to transfer money into the accounts of lenders this week to close the deal,” said a person directly involved in the transaction on the condition of anonymity. “Once the money is paid to banks, we will go ahead with the takeover. There is no court order staying the resolution plan per se, it's basically fait accompli,” said this person, adding that the ongoing litigations should not impact the closing of this deal.
Piramal Capital and Housing Finance Limited has proposed to repay lenders a total sum of Rs 37,250 crores, as per the plan approved by the lenders and court. This includes Rs 12,700 crores in the form of upfront cash payout, Rs 3,000 crores in the form of interest income earned by DHFL during the corporate insolvency resolution process, Rs 1,000 crores for the insurance venture of DHFL, another Rs 1,000 crores interest income due to financial creditors post-NCLT approval, and Rs 19,550 crore in the form of 6.75 percentr non-convertible debentures due 2031 with an option to repay after five years.
Against the total admitted claims of Rs 83,304.69 crores for all secured financial creditors, including those who voted for and against eh resolution plan, Piramal has proposed to repay Rs 34,546.31 crores, not including Rs 3,000 crores of interest income. CNBC-TV18 has learnt that the actual amount received by lenders may be even higher, as the cash on books of DHFL has grown since, and will yield higher interest. While the payout by the Piramal Group remains unchanged, what banks receive will be higher than initially calculated, said two people in the know. The total recovery by creditors may be in excess of Rs 38,000 crores, CNBC-TV18 has learnt.
DHFL is facing Rs 87,247 crore of claims from 77 financial creditors under the insolvency and bankruptcy law.
NCLT had directed Piramal Capital to make payments to creditors by September 5, that is, within 90-days of approval from NCLT. However, there were delays since with first the court asking lenders to consider a higher payout to certain small investors, and with 63 Moons Technologies also moving challenging the legality of Piramal’s plan in court.
The key lenders to DHFL include State Bank of India, which has admitted claims of Rs 7268 crores, including those from its Singapore and Mauritius branches, Bank of India with Rs 4,125 crores claims, Canara Bank with Rs 3750 cr crores, Union Bank of India Rs 3552 crores, Punjab National Bank with Rs 2938 crores, Bank of Baroda with Rs 2,075 crores, Indian Bank Rs 1410 crores, Central Bank Rs 1078 crores and so on. ​
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