[‘Daily News Updates’ will provide you with a simplified understanding of the important economic/financial events across the country]
Dewan Housing Finance Corporation (DHFL) shares to be delisted from the Stock Exchanges after approval of the Resolution Plan
The National Company Law Tribunal (NCLT), on June 7, approved the overall resolution plan filed by the Piramal Group for DHFL under the Insolvency and Bankruptcy Code, 2016 (IBC). Under the plan, its shares will be delisted from the stock exchanges.
In December 2019, DHFL was the first financial services company against which an application was filed under the IBC. This was made possible through an amendment to the Code, which allowed the regulator (i.e., RBI) to file for insolvency proceedings against financial services companies. [DHFL is a Non-Banking Financial Company].
[Read- What Happened to DHFL?]
[Also read- The Ultimate Guide To Understanding The Insolvency And Bankruptcy Code]
During the insolvency process, claims worth Rs. 87,082 crores were admitted as being due to various financial and operational creditors.
Piramal Capital bid Rs. 34,250 crores (40 % of the admitted claims) in their resolution plan, which was approved by the Committee of Creditors with a 94% majority (66% is required for approval) in January 2021.
Last month, in a bizarre order, the NCLT asked the Committee of Creditors to consider the settlement offer filed by Kapil Wadhawan, the erstwhile promoter of DHFL, before the court approved the resolution plan. (Kapil Wadhawan is currently in jail, facing charges of money laundering and undergoing investigation by the CBI and the ED). The NCLAT (appellate tribunal) stayed the order and directed the NCLT to decide upon the resolution plan, leading to yesterday’s approval order. Kapil Wadhawan moved the Supreme Court against the NCLAT order. Hence, the NCLT’s approval order is subject to the decision of the NCLAT (on whether the settlement offer by Kapil Wadhawan must be considered) and the Supreme Court (in the same matter).
[Under Section 12A of the Code, the applicant can move an application, after the approval of the Committee of Creditors by a majority of 90%, before the NCLT for withdrawing the original application under which the insolvency process actually began. This usually happens when the erstwhile promoters file an acceptable settlement offer. In the present case, however, the Committee of Creditors had already rejected the settlement offer filed by Kapil Wadhawan as it was ‘commercially unsound’ and meant to delay the insolvency process. Also, Kapil Wadhawan was disqualified under Section 29A of the Code (which bars wilful defaulters and some other categories of promoters from filing resolution plans) to file a resolution plan for DHFL. Thus, the NCLT should have ideally approved the resolution plan initially based on the Committee of Creditor’s commercial wisdom].
Policy Changes announced by PM Modi for India’s Vaccination Programme
From 1st May 2021, the fourth (accelerated) phase of India’s vaccination programme was kickstarted as vaccination was opened for all adults. [Earlier, only people above the age of 45 were eligible for the vaccine]. In the accelerated phase, the centre was to procure 50% of the total vaccines and continue with its free programme for people above the age of 45, while 25% each of the total vaccines could be procured directly by the states and the private hospitals for vaccinating the rest of the adult population. The scheme will be partly rolled back, as announced by PM Modi yesterday, from 21st June. The Central Government will now procure 75% of the total vaccines for all adults (who will be vaccinated for free) and provide them to the states. The private hospitals can continue with their 25% procurement, but their service charge will be capped at Rs. 150. It is to be noted that vaccine production is expected to be ramped up massively in the coming weeks.
[Also read- INDIA’S COVID VACCINE ROLLOUT AND VACCINE ‘MAITRI’ – ALL YOU NEED TO KNOW]
PAYTM gets board approval for Initial Public Offering (IPO)
The owner of the digital payments app PayTM, One97 Communications Ltd., invited its shareholders to dilute their shareholding and tender their shares for its Initial Public Offering (IPO) by November-end. The IPO will include the issuance of new shares and the sale of shares by existing shareholders. [When the shares of a private company are first offered to the general public by listing on the stock exchange, it is known as an IPO].
[Also read- WHAT ARE FINANCIAL MARKETS? WHAT ARE THE SECURITIES TRADED IN THESE MARKETS?]
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