Union Bank of India has initiated the process of invoking the personal guarantees furnished by the Wadhawans as promoters of the beleaguered Dewan Housing Finance Ltd (DHFL), now under the IBC.
Union Bank leads the 18-bank consortium that has exposure to DHFL. In all, claims worth over ₹87,000 crore of 58 creditors are at stake in the ongoing insolvency proceedings.
DHFL was the first non-bank company referred to the National Company Law Tribunal (NCLT) by the RBI under the new rules notified by the Government in November last year under Insolvency and Bankruptcy Code ( IBC).
“We have, a few days ago, initiated the process of guarantee invocation by sending the demand letter to the promoters,” sources in Union Bank said. The approval to initiate the process (to send the demand letter) came from a core panel (of 7-8 top lenders) of the committee of creditors, which has over 50 members, they added.
The promoters — Dheeraj and Kapil Wadhawan — have 14 days to reply to the demand letter, based on which Union Bank will take a call on whether or not to file a personal bankruptcy case before the NCLT against the promoters, it is learnt.
The Finance Ministry had in August directed public sector banks to up the game on personal guarantors of corporate debtors and advised them to institute a mechanism to monitor cases that may require the initiation of individual process against such guarantors before NCLT. However, Union Bank officials maintained that the action was not prompted by the Finance Ministry’s advisory on this matter.
If Union Bank of India does eventually end up filing the personal bankruptcy case against DHFL promoters and NCLT were to admit it, then it would be the third such instance of banks filing personal insolvency petitions against promoters of defaulting firms. Already, State Bank of India has filed a similar plea ( personal bankruptcy case) against Anil Ambani and Bhushan Power promoter Sanjay Singhal.