SC orders Franklin to pay back debt investors Rs 9,122 cr in 20 days

Five schemes have from 9-63% cash in. SBI Mutual Fund to carry out the disbursement

Staff Writer   /   February 2, 2021
Franklin Templeton

Unitholders in 5 debt schemes of Franklin Templeton MF can hope to get some cash in the next 20 days. 

This is after the Supreme Court on Tuesday directed that Rs 9,122 crore, the cash available for distribution as on January 15, in the to-be-wound up debt schemes of Franklin Templeton MF be disbursed to unitholders in proportion to their respective interest in the assets of the scheme, reports say. Do note that 5 of 6 debt funds are cash-positive.

The Bench of Justice S Abdul Nazeer and Sanjiv Khanna entrusted SBI Mutual Fund will carry out the exercise of disbursement, after counsel appearing for all parties agreed to the same, the reports said.

The distribution of money to unitholders is required to be completed within twenty days from today. The Court also gave the parties the room to move applications in case of any difficulty arising out of the process.

As on January 15, individually, Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund and Franklin India Short Term Income Plan have 63%, 50%, 41%, 26% and 9% of their respective AUM in cash. Unitholders of these 5 schemes will get cash due to the SC order.

Borrowing levels in Franklin India Income Opportunities Fund stood at 6% of AUM (assets under management) on January 15, and so it is still cash-negative. Unit holders of this scheme will not get any cash distribution. 

Franklin Templeton spokesperson said: “We are pleased that, as requested by us, and in the best interests of Unitholders, the Hon’ble Supreme Court has directed the distribution of INR 9,122 crore (distributable surplus as of 15 January 2021) to the respective unitholders in proportion to their holdings in the schemes under winding up, subject to fund running expenses.

As previously stated, we went ahead with the difficult decision of winding up these schemes because of our firm belief that this was the right decision to preserve value for investors, as evidenced by the generation of cash in these schemes over the last 9 months. We believe the distribution of monies will provide unitholders with much needed liquidity and look forward to working with the Regulator and SBI Mutual Fund to distribute the cash within the period stipulated by the Court.”

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