DHFL Insolvency: FD Holders Queuing Up to Submit Claims, Here is What You Need to Do
Long queues of harried depositors were see at the Bandra office of Dewan Housing Finance Ltd (DHFL) to submit their claims forms following the glimmer of hope held out to them since the appointment of an administrator by the Reserve Bank of India (RBI).
As on 6 July 2019, DHFL had public deposits of Rs6,188 crore, which fell from Rs10,166.72 crore at the end of March 2018. There are more than one lakh fixed deposit (FD) holders in DHFL.
The FD holders of DHFL, many of whom are retirees who had invested their lives’ savings had invested in the company for a steady income and relying on the AAA credit ratings and 25-year history of the company.
Pune bench of Debt Recovery Tribunal (DRT) has restrained any payments to creditors after a petition by Catalyst Trusteeship Ltd, on behalf of DHFL bond-holders, for recovering their dues worth Rs27,000 crore, in what is considered one of the largest failures of any non-banking finance company (NBFC).
Experts have pointed out that since DHFL’s fixed depositors are unsecured creditors, they are behind secured non-convertible debenture holders like some mutual funds.
Last week, R Subramaniakumar, the RBI-appointed administrator had asked all FD holders of DHFL to file their claims before 17 December 2019. This move suggests that FD holders, even though they are unsecured creditors, could hope to get at least a part of the money from the failed housing finance company, whose board was sacked by the banking regulator after over a year of turmoil and controversy.
The National Company Law Tribunal's Mumbai bench had earlier admitted RBI's application for initiating insolvency proceedings against the failed NBFC, and permitted it to go ahead in the matter.
Mr Subramaniakumar said the insolvency resolution process is expected to be completed within 180 days from the start of the process or by 31 May 2020. DHFL is the first mortgage lender to be referred to the tribunal by the regulator.
Source: Draft resolution plan formulated by the company and shared on the BSE portal
The RBI said there would be a debt moratorium on the company as long as the insolvency process is pending while filing the application for initiating corporate insolvency resolution process against DHFL.
The cash strapped NBFC has already been hauled to the Bombay High Court by the State Bank of India, Union Bank of India and HDFC Bank for recovery of their dues.
DHFL had stopped paying all creditors after the Bombay HC order on 10th October put a stay on payments. The company had earlier stopped accepting public deposits and renewals of existing deposits and pre-mature withdrawals of existing deposits on 21st May.
FD holders who have been running from pillar to post for their refunds need to understand the claims process. Many have been crowding the Bandra office merely for information, which is easily available from their website.
The entire claim process and the forms required to be submitted have been uploaded on the DHFL website.
The FD holders of DHFL have to submit their claims with proof on or before December 17, 2019, to the administrator at the address as below:
Address: 6th Floor, HDIL Towers, Anant Kanekar Marg, Station Road, Bandra
As a fixed deposit holder, one needs to DHFL FD claim form for which Form CA can be downloaded from:
There are three names of Insolvency professionals (IRs) identified to act as authorised representative of creditors in a class and as a depositor, one needs to fill the name of any one of them. The three insolvency resolution professionals listed in the notice are Charu Sandeep Desai, Deepak Kumar and Pravin Navandar.
The authorised representative will represent depositors in the meetings of the committee of creditors (CoC) and ensure that their views are communicated. The representative will also facilitate voting by depositors at these meetings
The form CA has to be signed by the depositor at three places and if the depositor holds multiple deposits, only one claim form needs to be submitted with details of all deposits held by the individual.
The following documents need to be attached with the Claim Form:
Copy of the FD certificate
Copy of Identification proof (PAN/ Aadhaar)
Copy of cancelled Cheque
Copy of death certificate in case the first depositor has passed away along with an affidavit stating the relation of the person submitting the Form with the first deposit holder.
The claim Form CA needs to be scanned, along with the other supporting documents and emailed to [email protected]
The last date for submitting the completed claim form along with all required documents is 17 December 2019.
Non-convertible debenture (NCD) holders will be represented in this claims process by Catalyst Trusteeship Ltd — the debenture trustee for the bonds. The debenture trustee has been quite lethargic in its duties and it was only in June 2019, after DHFL first defaulted on a few obligations, that it disclosed the company’s failure to maintain adequate security for its NCDs of 2016-2018 vintage. DHFL had also skipped maintaining the 15 percent Debenture Redemption Reserve required by the Companies Act from last year. It was only after defaults surfaced that the trustee seems to have initiated legal action against DHFL for these slip-ups.
The trustee was not very forthcoming in its communications with bondholders. Writing to DHFL’s retail NCD holders for the first time in August 2019, it sought their written consent for an inter-creditor agreement and a draft resolution plan, offering very sketchy details of what the plan demanded.
Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) chairman Subhash Chandra Khuntia said that exposure of insurance companies to the NCDs of debt-ridden DHFL will be written off using due process. While the exact figure is not publicly available, it is estimated that insurers have around Rs50 to Rs70 crore worth DHFL NCDs. But the identity of these insurers is not known.
From now on, Mr Khuntia has advised insurers to not merely rely on credit rating of such investment instruments and to do an independent review of the company and its financials.