Money & Banking

DHFL Committee of Creditors to discuss four offers on Monday

K.R.Srivats New Delhi | Updated on October 26, 2020

This will be the first CoC meeting after the bidding process ended on October 17

The Committee of Creditors (CoC) to the beleaguered DHFL will Monday begin discussing the four offers that lenders have received for the debt laden housing finance company (HFC).

There will be a presentation on the offers made during the bidding process that ended on Saturday, sources said. Lenders will get to know who has bid what and the conditionalities, they said.

It may be recalled that Oaktree Capital, which offered the highest recovery to lenders, has offered Rs 28,000 crore for the entire company. The others in the fray are Adani Group, which is learnt to have offered about Rs 1,600 crore for the wholesale portfolio and slum redevelopment asset; Piramal Enterprises, which has offered about Rs 15,000 crore for the retail portfolio; and Hong Kong’s private banking firm SC Lowy.

It may take another fortnight before the winning bidder is selected, banking industry sources said.

The SBI-led bankers are owed Rs 85,000 crore. Since the entire exposure to DHFL has been declared a “fraud” account, banks had provided 100 per cent for this exposure in their books.

Whatever they realise from the resolution of DHFL, the lenders’ balance sheets will be positively impacted as there will be write-backs. The resolution may take up to January-end next year given that RBI and NCLT have to approve it. It will be a big achievement if the lenders get the monies in this fiscal itself.

Any creditor to DHFL cannot expect over 30 per cent from the resolution and may have to take a haircut of at least 70 per cent, banking industry observers said. The decision on the extent of the haircut is at least two months away, a former chief executive of a public sector bank said.

Last November, DHFL became the first financial services provider to go to the Insolvency and Bankruptcy Code (IBC) process. The Covid-19 induced lockdown had delayed the IBC process and bid submissions for DHFL were delayed on this count.

More than 100 people (creditor representatives) are expected to participate in the virtual CoC meeting slated for Monday, sources said.

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Published on October 25, 2020

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