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The lenders to troubled Dewan Housing Finance Corporation Ltd (DHFL) have extended the timeline for submission of bids to December 10 as they look to trim their losses. This comes even as a section of lenders to DHFL want to examine the Binani Cement resolution case where a late bid from Aditya Birla group was allowed since it was higher.
The CoC of DHFL led by State Bank of India has called for revised bids after Adani Enterprises submitted a revised bid for the whole book of the housing finance company as against its earlier bid of just the wholesale and SRA portfolio, which led to a protest from Piramal Enterprises.
Nadiya Sarguroh, Senior Associate, MZM Legal, said Adani’s increased bid may have to be considered by the CoC despite being delayed as under Sec 30(4) of the Code the CoC has absolute right to reject or accept one or more resolution plan prior to approval of the same by the Adjudicating Authority considering another bid or plan may have better commercial viability with a view to achieve maximisation of assets. He, however, added that the case of Binani Cement was different from that of DHFL as Dalmia’s plan was rejected by the NCLAT on the grounds of primary discrimination between creditors, not only because UltraTech’s offer was higher.
Under the plan for fresh bids, all four existing bidders — Adani, Piramal, Oaktree and SC Lowy — can submit bids for the whole or part of the book of DHFL.
While the back and forth on bids may mean an extension in the timeline for resolution of DHFL, it is expected to help bankers trim their losses and experts say that such negotiations are often needed to maximise the value of the company under resolution.
Market views
“The DHFL resolution has been going on for a long time but when banks are facing such a haircut, then it is often necessary to take such a decision,” said a person familiar with the development, pointing out that the initial bids were much lower compared to the value of the companies.
Experts, too, say that the CoC can take any decision on bids as long as it is within the rules and regulations of the Insolvency and Bankruptcy Code and is just and fair.
“The NCLAT is of the view that the CoC may negotiate with prospective resolution applicants and extend the timelines for submission of revised bids to maximise the value of the corporate debtors’ assets,” said Sushmita Gandhi, Partner, IndusLaw.
Gandhi further noted that revised bids can only be accepted in accordance with the EOI and the Rules and Regulations under the IBC and cannot be done in an arbitrary or illegal manner, which may include accepting bids beyond deadlines. “The IBC was at one time more focussed on resolution and restructuring of the stressed company. But with banks facing losses in so many of the loans they had given, it is obvious that they would be keen on getting better returns as well,” noted an expert who did not wish to be named.
Even with the highest bids that were submitted earlier estimated at about ₹31,500 crore, lenders to DHFL are staring at a haircut of about ₹50,000 crore.
(With inputs from Suresh Iyengar)
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