Former DHFL Promoter Kapil Wadhawan Contests Insolvency Order at NCLAT

Kapil Wadhawan, the former promoter of Dewan Housing Finance (DHFL), has approached the appellate tribunal NCLAT to contest the NCLT's decision to start personal insolvency proceedings against him. This challenge follows an order from the Mumbai bench of the National Company Law Tribunal (NCLT) on April 2, which directed the initiation of these proceedings based on a plea by Union Bank.

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Personal Insolvency Proceedings

The matter was presented before a two-member bench of the National Company Law Appellate Tribunal (NCLAT). However, the hearing has been postponed to July 18. The NCLT had earlier appointed Devendra Mehta as the resolution professional (RP) to gather claims from lenders and assess Wadhawan's personal assets.

Wadhawan had guaranteed loans taken by DHFL, which included term loan facilities exceeding Rs 4,000 crore and working capital facilities amounting to Rs 450 crore. Following defaults, the NCLT ordered insolvency proceedings against DHFL in November 2019. Later, Piramal Capital acquired the debt-ridden company for Rs 34,250 crore and merged it into its operations.

Creditor Recovery

Creditors of DHFL managed to recover a total of Rs 38,000 crore through the resolution process when the plan was approved. The Insolvency and Bankruptcy Code permits personal guarantors to be directly subjected to insolvency proceedings. This provision was also applied earlier this year when the NCLT initiated insolvency proceedings against media baron Subhash Chandra following a plea by Indiabulls Housing Finance.

The case highlights ongoing efforts to resolve financial disputes involving significant figures in India's corporate sector. Wadhawan's appeal will be closely watched as it progresses through the appellate tribunal.

The outcome of this appeal could set a precedent for future cases involving personal guarantors in insolvency proceedings. It underscores the legal complexities surrounding financial guarantees and corporate insolvencies in India.