Cyril Amarchand Mangaldas advises creditors in DHFL insolvency case

Cyril Amarchand Mangaldas advises creditors in DHFL insolvency case

Resolution plan submitted by Piramal Capital & Housing Finance Limited was approved by the Committee of Creditors by a majority voting

Leading Indian law firm Cyril Amarchand Mangaldas (Firm) has acted as the legal counsel to the Committee of Creditors (CoC) of Dewan Housing Finance Corporation Limited (DHFL) in the corporate insolvency resolution process (CIRP) with the aim of bringing maximum value to its clients.

The CoC of DHFL comprises banks, financial institutions, and authorised representatives acting on behalf of a large number of debenture holders (both institutional and retail) and public deposit holders (several thousand of each).

The law firm advised the CoC since the inception of the CIRP and through a bidding process. It represented the CoC successfully before the National Company Law Tribunal (NCLT), leading to the approval of the Resolution Plan.

The bidding process as part of the CIRP was designed to maximise value for all stakeholders, following which the resolution plan submitted by Piramal Capital & Housing Finance Limited. The Resolution Plan was approved by the CoC on 15 January 2021 by a significant majority of 93.65 per cent votes.

The Reserve Bank of India (RBI) provided its no-objection for change in control/ownership/management in DHFL pursuant to the Resolution Plan in accordance with the FSP Rules on 16 February 2021. The Resolution Plan was the NCLT, Mumbai Bench on 7 June 2021.

DHFL is the very first Indian non-banking financial company (NBFC) undergoing corporate insolvency resolution process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) read with the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (FSP Rules).

This is the very first case of insolvency under the IBC against a financial service provider and under the FSP Rules. It is also among the largest accounts to be taken through the IBC process, with a total debt value of Rs 87,247.68 crore.

Issues that are specific to multiple diverse classes of creditors, including term lenders (INR and foreign currency), institutional and retail bondholders (domestic, international and masala bondholders), institutional and retail depositors, statutory bodies such as NHB came to the fore and were resolved as part of the CIRP.

Pursuant to the Resolution Plan, Piramal proposes to acquire 100 per cent shareholding and control of the Target Company and make payment towards discharge of the total debt of the DHFL.

This insolvency was initiated by the RBI following the notification of the FSP Rules, pursuant to which the framework for the insolvency of systemically important non-banking finance companies was subsumed under the IBC framework. The erstwhile board of DHFL was superseded prior to the initiation of the CIRP under the terms of the RBI Act.

The Banking & Finance, and Disputes Practices of Cyril Amarchand Mangaldas advised CoC of DHFL on the Transaction. Cyril Shroff, Managing Partner, provided strategic advice to the team. The Insolvency & Bankruptcy Team was led by Partner L. Viswanathan, Amey Pathak, (the relationship partner on the transaction), Partners Richa Roy and Abhijeet Das, with support from Principal Associate Surbhi Pareek. They advised and represented the CoC in respect of insolvency and bankruptcy transactional, process and execution aspects.

The Disputes team was led by Partners Indranil Deshmukh, Animesh Bisht and Raunak Dhillon, with support from Principal Associate Saloni Kapadia.

Other parties involved in the Transaction included JSA (Co-Counsel to the CoC of DHFL), SBI Capital Markets Limited (Transaction advisors to CoC) and EY (Transaction advisors to DHFL).

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