DHFL going to liquidate

Dewan Housing Finance Corporation Ltd. (DHFL) is a deposit-taking housing finance company which is headquartered in Mumbai with branches in major cities across India. It was established for lower and middle income groups in semi-urban and rural parts of India to enable access to economical housing finance. The company is undergoing substantial financial stress as a result, the company’s ability to raise funds has been substantially impaired and the business has been brought to a standstill.

DHFL is burdened with debt. Banks, mutual funds and insurance companies to resolve DHFL’s debt under the Reserve Bank of India’s framework for resolution of stressed assets. Banks also signed an inter-creditor agreement and were working on the proposal submitted by the DHFL management, including converting part of the debt into 51 per cent equity.

Dewan Housing has about INR38 billion in outstanding in corporate deposits but it is uncertain that the amount can be recovered. DHFL has set aside INR24 billion as provisions to cover this. The data on the debt-laden shadow lender’s website showed that the Lenders, bondholders, employees and other creditors of Dewan Housing Finance Corp. Ltd (DHFL) have claimed dues of INR879.05 billion as of 2019 under the insolvency resolution process excluding the holders of fixed deposits. As the company’s financial position revealed serious deterioration, the company is finally going to liquidate.

The decision was taken at a lenders meeting, at which advisory firm Grant Thornton was appointed to conduct an audit of Dewan’s transactions and the lenders also appointed real estate specialists JLL India and RBSA Advisors to value Dewan’s assets and give them an assessment of the losses they are likely to face.

The terms are set to liquidate the Bank and proceedings are to be started for its bankruptcy. The bankruptcy courts have taken the bankruptcy proceedings under it and has stopped DHFL to provide any kind of amount to its creditors as the proceedings has started and all the actions would now be taken according to the decision of the bankruptcy court. The company had to encounter such proceedings as it failed to manage its position and financial statement showed huge amount to be claimed by the lenders and creditors.