63Moons moves NCLT against Piramal ascribing ₹1 value to DHFL’s ‘recoverable’ assets – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/markets/stock-markets/63moons-moves-nclt-against-piramal-ascribing-1-value-to-dhfls-recoverable-assets/article34407627.ece

63Moons Technologies has dragged Piramal Capital and Housing Finance to the National Company Law Tribunal (NCLT) for ascribing ‘₹1’ value to the assets or transactions of Dewan Housing Finance Corporation (DHFL) that, it says, have a recovery potential of more than ‘₹40,000 crore’.

63Moons, the erstwhile promoter of commodity bourse MCX, has accused Piramal of trying to illegally pocket the money that is likely to be recovered from the debtors of DHFL. 63Moons, which is an admitted financial creditor of DHFL, has also challenged before the NCLT the approvals given by the CoC and the Resolution Professional to Piramal. A hearing was conducted this month.

‘Unreasonable value’

“Instead of assigning fair value to (Section 66 of the IBC) transactions, which are worth more than ₹40,000 crore, Piramal has assigned ₹1 for any recovery made. The original RFRP was modified as per meeting of COC on September 10, 2020. Subsequently, Piramal, to the detriment of the interest of DHFL creditors, ascribed a grossly arbitrary and unreasonable value,” the petition by 63Moons says.

BusinessLine’s email query to Piramal remained unanswered.

However, Piramal has argued in the NCLT that there was no clause mentioning such an amount be used for the benefit of creditors. Senior counsel Navroz Seervai, appearing for 63Moons, told the NCLT that Piramal’s RFRP had such a clause, which read: “Any positive monetary recovery received as a result of orders passed in relation to the avoidance transactions shall be distributed, net of costs and expenses including taxes, to the financial creditors pro-rata to the extent of the debt.”

63Moons has argued that recoveries from reversal of transactions (of DHFL) in terms of section 66 of Insolvency and Banking Code (IBC) would solely benefit Piramal.

When an entity is insolvent, certain transactions are to be avoided as per the IBC, otherwise it will affect its financial position. These transactions are called avoidable transactions. It is to maximize value of assets and its equitable distribution to all stakeholders. IBC requires three types of avoidable transactions like preferential transactions, undervalued transactions and extortionate credit transaction.

In case of DHFL avoidable transactions arise as erstwhile promoters are accused of fraud, money laundering and other illegal acts.

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