NCLT Admits Insolvency Application Against Former DHFL Promoter Kapil Wadhawan
The insolvency plea has been filed against Wadhawan in his capacity as a personal guarantor for loans availed by DHFL.
The National Company Law Tribunal has admitted an insolvency application by Union Bank of India against Kapil Wadhwan, former promoter of Dewan Housing Finance Ltd., for recovery of Rs 2,421 crore.
DHFL had availed term-loan facilities worth Rs 4,009 crore along with working capital facilities to the tune of Rs 450 crore. Wadhawan had provided an unconditional and irrevocable guarantee for these loans.
When the default occurred, the bank issued a demand notice to Wadhwan to pay the outstanding amount of Rs 3,958 crore. However, Wadhawan failed to pay the amount.
When DHFL was acquired by the Piramal Group in 2021 for Rs 34,250 crore, Union Bank of India had received Rs 1,536 crore under DHFL’s resolution plan. Wadhawan still had to pay about Rs 2,421 crore to the bank.
Since Wadhawan was unable to pay back the bank’s dues, the resolution professional advised the tribunal to admit the insolvency petition against him since it was clearly specified in DHFL's resolution plan that the creditors were entitled to take all steps to recover their unrecovered financial debt from the personal guarantor.
Wadhawan disputed the demand notice by arguing that he had executed a joint deed of guarantee in favour of a certain security trustee appointed by a consortium of 29 banks. And since the responsibility for enforcing this joint deed lay with the consortium, he argued that an individual bank could not take any action against him.
The security trustee was appointed by the consortium to accept the ecurities furnished to secure the loans advanced to DHFL.
The NCLT was unwilling to accept this line of argument. It said the deed of guarantee made it abundantly clear that a singular bank can take an independent action against Wadhawan and that it doesn't necessarily have to be a combined action by the consortium.
The tribunal admitted Wadhawan into insolvency and imposed a moratorium in relation to all his debts from the date of admission of the insolvency application—April 2.
