DHFL resolution: Kapil Wadhawan writes to SEBI, RBI against 63 Moons

Jailed erstwhile promoter of crisis-hit DHFL Kapil Wadhawan has written to the Reserve Bank and Sebi alleging that 63 Moons Technologies is hampering the company’s insolvency resolution process.

While lenders are looking to auction DHFL assets to recover Rs 83,000 crore of unpaid loans, Jignesh Shah-founded 63 Moons Technologies has filed a writ petition in the Madras High Court seeking attachment of DHFL assets to recover its dues of Rs 200 crore.

In a letter to RBI Governor Shaktikanta Das and Sebi Chairman Ajay Tyagi, with copies marked to the Prime Minister’s Office, Wadhwan has alleged that 63 Moons is seeking to give precedence to the recovery of its dues over the Rs 80,000 crore of outstanding that other creditors would get to settle in the insolvency process.

When reached for comments, a 63 Moons spokesperson, in a statement, expressed surprise at Wadhawan being able to write the letter from Taloja Prison (New Mumbai) and said, while it would not like to comment on the contents of the letter, the company was “committed to recovering its money”.

While the spokesperon did not state what its outstanding due from DHFL is, Wadhawan, in the letter, stated that 63 Moons had invested Rs 200 crore in non-convertible debentures of DHFL during a public issue in 2016 and these are redeemable from 2023 onwards.

“I am constrained to address this letter to draw your attention to the unfortunate and destructive actions taken by 63 Moons Technologies which are likely to disrupt the entire resolution process of DHFL which is presently undergoing,” Wadhawan said in his letter, a copy of which has been reviewed by PTI.

63 Moons has filed a writ petition before the Madras High Court seeking attachment of assets belonging to DHFL, Wadhawan said in the letter.

“In the guise of this writ petition, 63 Moons is seeking to get precedence over every other creditor of DHFL including the poor FD (Fixed Deposit) holders who will be left in the lurch if any order as prayed for by 63 Moons is granted. This is apart from the substratum of the resolution process under the IBC (Insolvency and Bankruptcy Code) being completely destroyed if reliefs are granted to 63 Moons,” said the former promoter of DHFL.

Wadhawan has sought immediate steps from the regulatory authorities so as to prevent the “malafide actions” of 63 Moons from succeeding, which he alleged were “devoid of any merits”, “malafide” and “not maintainable”.

According to the letter, 63 Moons had subscribed to non-convertible debentures of DHFL in a public issue in 2016.

“These NCDs are redeemable from the year 2023 onwards. The total debt payable to 63 Moons is Rs 200 crore as opposed to more than Rs 80,000 crore to all creditors put together,” Wadhawan’s letter said.

DHFL faced liquidity crisis after the IL&FS fiasco in September 2018.

The non-banking financial company faced severe liquidity crunch. However, it managed to repay nearly Rs 44,000 crore to its creditors subsequently.

Later on, after the intervention of the Reserve Bank, an administrator was appointed to head the company in November 2019. A three-member committee has also been appointed to be the advisors to the administrator.

Currently, DHFL is undergoing a resolution process in the National Company Law Tribunal (NCLT) under the IBC. It is also the first financial sector company to be undergoing such a process.

63 Moons had also filed a suit in 2019 in the Bombay High Court against DHFL claiming an amount of Rs 231 crore along with interest and also claimed various reliefs.

Wadhawan said having failed to recover its monies in the said Bombay suit, which was stayed once the moratorium commenced under the IBC, 63 Moons filed one more suit in the Chennai High Court.

“I request your urgent intervention to prevent 63 Moons from disrupting the resolution process and to ensure that thousands of crores of public money is not irretrievably lost,” the letter said.

The multitude of disputes between creditors of DHFL, resolution applicants and other stakeholders could have been avoided if the 2019 plan that had been approved by all the banks which offered 100 per cent repayment of the principal amount to all creditors is considered with appropriate modifications by the CoC (Committee of Creditors) and Administrator, Wadhwan said in the letter.

“It would be in the interest of all stakeholders if the CoC/ Administrator were directed to urgently consider the 2019 plan particularly as the other bids received by DHFL result in a 70 per cent haircut to all creditors and a write off of nearly Rs 40,000-50,000 crore public money,” he said.

According to the 63 Moons spokesperson, the company is “committed to recovering its money” and that it will shortly provide details of all personal assets of Kapil and his brother Dheeraj Wadhawan to concerned authorities.

“Having failed to either intervene in the writ proceedings or have the injunction orders vacated, Kapil Wadhawan now seeks for regulatory intervention in judicial proceedings pending before the Madras High Court which is impermissible in law.

“That, in fact, would amount to interference in the administration of justice. We are certain the regulators would be aware of this legal position,” the spokesperson said in the statement.

Noting that 63 Moons is merely exercising its legal rights to recover its money, the spokesperson said the company is committed to recovering its money and will continue to take suitable and appropriate action in accordance with law.

“There is no question of disrupting any process before the NCLT pursuant to IBC. To the contrary, Kapil Wadhawan has been making last ditch efforts to intervene in proceedings before the NCLT, possibly to suppress the actual events that lead to DHFL’s massive defaults in excess of (Rs) 84,000 crore.

“Hence, if there is any attempt to disrupt the process before the NCLT, it is by Kapil Wadhawan alone,” the 63 Moons spokesperson said.