, Edited by Defined Desk | New Delhi |
Up to date: November 17, 2020 9:20:08 pm
Until November 9, which was the final date for submission and revision of gives for DHFL, Piramal Enterprises, the US-based Oaktree, Adani, and Hong Kong-based SC Lowy had submitted bids. (File)
The Adani Group sprung a shock final week by asserting it would buy all the assets of debt-laden Dewan Housing Finance Limited (DHFL), for slightly over Rs 31,000 crore. The Adani Group’s bid is now larger than different gives for the corporate, which is present process a company insolvency decision course of (CIRP). Additionally it is more likely to pressure the lenders to name for contemporary bids for the corporate.
What’s the case in opposition to DHFL?
On November 29 final 12 months, the Reserve Financial institution of India (RBI) filed an software for initiation of insolvency in opposition to DHFL, which was a non-banking monetary firm (NBFC). DHFL is the primary NBFC to endure insolvency decision, which was triggered after reviews of funds mismanagement on the firm surfaced.
Most NBFCs don’t have any bodily property so to talk, and the CIRP is initiated beneath a brand new decision framework introduced out by the federal government. For the reason that RBI is the regulator for all banking establishments in India, it was additionally the petitioner which had approached the Mumbai bench of the Nationwide Firm Regulation Tribunal (NCLT) for initiation of insolvency in opposition to DHFL.
Earlier in 2019, the corporate had defaulted on the fee of curiosity on its business papers and bonds value Rs 900 crore. Although the corporate maintained that the money crunch was a brief drawback, most score companies downgraded the score of its business papers to ‘D’, indicating the default standing.
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This was adopted by reviews that the promoters of the corporate, Kapil Wadhawan, the then chairman and managing director, and Dheeraj Wadhawan, then a non-executive director, had transferred funds the corporate had collected into shell corporations, which then re-routed the monies again into the accounts of the Wadhawans.
What are the bids for DHFL thus far?
Up till November 9, which was the final date for submission and revision of gives for DHFL, Piramal Enterprises, the US-based Oaktree, Adani, and Hong Kong-based SC Lowy had submitted bids.
Within the first spherical of bidding, Piramal Enterprises provided Rs 15,000 crore for the retail arm of DHFL, whereas Oaktree had provided to pay Rs 27,800 crore for your entire firm. SC Lowy had in the meantime provided Rs 2,300 crore for non-slum redevelopment authority mortgage guide of the corporate. After the lenders to the company expressed unhappiness over the low bids, all the businesses revised their bids considerably.
The Adani Group, which was all the time a bidder in rivalry, had made a suggestion of Rs 2,700 crore just for the wholesale and slum redevelopment authority mortgage guide of DHFL. The corporate later revised its bid and mentioned it will provide slightly over Rs 31,000 crore for your entire portfolio of the corporate.
How does Adani Group bid change issues for DHFL’s lenders?
With the whole liabilities of the DHFL group estimated at over Rs 85,000 crore, lenders to the NBFC are more likely to search bids which maximise the funds they’ll get well. Since DHFL doesn’t technically have many property to its identify, the lenders can be looking for to get well as a substitute of on the lookout for maximisation of worth of the property, authorized consultants mentioned.
The Adani Group’s unsolicited provide for your entire guide of the corporate will pressure lenders to name for brand new bids for DHFL. Nonetheless, that is additionally more likely to face a authorized problem from present bidders like Piramal Enterprises and Oaktree.
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Piramal Enterprises has already written to the lenders, objecting to the decision plan submitted by the Adani Group. In its letter, the corporate mentioned that providing a decision plan after the submission date, which was November 9, was neither in accordance with the availability of the revised request for decision plan dated 16 September 2016 (RFRP), nor the Insolvency and Chapter Board of India (Insolvency Decision Course of for Company Individuals) Rules, 2016, (CIRP Rules).
Authorized consultants, nonetheless, imagine that the DHFL lenders can be at liberty to name for a contemporary spherical of bidding, which might give time to all of the bidders, together with the Adani Group, Piramal Enterprises, Oaktree and SC Lowy, to revise their plans and provide more cash than they have already got.
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