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NCLT initiates insolvency proceedings against DHFL

The NCLT has admitted the Reserve Bank of India’s plea for the initiation of insolvency proceedings against the bankrupt DHFL
New Delhi: The National Company Law Tribunal (NCLT) has admitted the Reserve Bank of India’s (RBI) plea for the initiation of insolvency proceedings against the bankrupt Dewan Housing Finance Corporation Ltd (DHFL). The RBI had filed an application with the NCLT Mumbai bench for starting the due process against DHFL on November 29.

Debt moratorium on DHFL

A statement released by the RBI said that there would be a debt moratorium on DHFL as long as the insolvency process is on. The Central bank had filed an application for the initiation of corporate insolvency resolution process against DHFL under several clauses of Section 227 and Section 239 of the Insolvency and Bankruptcy Code, 2016 along with provisions under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers) Rules.

The backdrop

After superseding DHFL’s board of directors and appointing R Subramaniakumar as its administrator on November 20, the RBI appointed a committee to advise the administrator of the private sector lender. The third largest pure-play mortgage player has been in liquidity crisis for long. As of July this year, the debt-ridden home financier owed Rs 83,873 crores to banks, the National Housing Board, mutual funds and bondholders/retail bondholders. Of the total amount, Rs 74,054 crores is secured and Rs 9,818 crores is unsecured.