DHFL crisis: Lenders meeting today to cobble up a resolution plan, still in process of signing inter-creditor agreement

Mumbai: The consortium of 31 lenders to the troubled Dewan Housing Finance (DHFL) are meeting on Thursday to discuss a resolution plan for the third-largest pure-play mortgage lender, sources said Wednesday. The lenders, which had last met on 1 July, are still in the process of signing an inter-creditor agreement for the company, a must to decide on a resolution plan under the 7 June, revised NPA circular form of the monetary authority. “The meeting is to discuss and decide on a resolution plan for DHFL,” a senior banker told PTI. At the 1 July meeting, lenders had decided to sign the inter-creditor agreement by 5 July but could not do so yet. “The process signing the mandatory inter-creditor agreement is still on. A majority of the banks have signed the agreement,” said another banker. [caption id=“attachment_4473541” align=“alignleft” width=“380”]  A file photo of Kapil Wadhawan, chairman and managing director, DHFL. Image courtesy: @kwadhawan1[/caption] According to the Reserve Bank’s revised framework for NPA resolution, dated 7 June, if a borrower is reported to be in default by any of the lenders, other lenders should undertake a review of the account within 30 days from the default, which will be called as review period. During the review period, banks may decide on a resolution plan and wherever a plan has to be implemented, all lenders will have enter into an inter-creditor agreement within those 30 days to provide for ground rules for finalisation and implementation of a resolution plan. The Wadhawan family, who owns a little over 39 percent in the company, has been looking at various ways of coming out of the stress which first came to light late last year following the IL&FS bankruptcy. These include selling stakes in group entities, including in the flagship to the extent of giving up half of their stake. DHFL has seen a rash of rating downgrades last month after it defaulted on Rs 1,150 crore to its bondholders due on 4 June. This led to a downgrade of its Rs 850-crore commercial papers to ‘default’ by three rating agencies. Following this on 11 June, it had paid Rs 962 crore of the Rs 1,150 crore debt towards interest on NCD repayment, but again on 25 June, it failed to fully redeem another CP worth Rs 225 crore. DHFL owes nearly Rs 90,000 crore to banks and other financial institutions, according to its FY18 annual report. Meanwhile, DHFL denied reports in a section of the media that Deloitte has resigned as its auditor. When contacted a company spokesperson said, “these are absolutely unfounded rumours.”