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The date of closure of the corporate insolvency resolution process (CIRP) of the financially distressed Dewan Housing Finance Corporation Ltd (DHFL) is expected to be extended to June 30 from May 31. This will give more time to the investors (resolution applicants) who participated in the Expression of Interest (EOI) to submit their resolution plans.
Considering the macroeconomic impact of the Covid-19 pandemic, the investors may want to re-work their resolution plans, taking into account the future prospects for the housing finance industry, including demand and delinquencies, said a bank well-versed with developments in this regard. Hence, the sale of DHFL may be possible only by August-September.
“The last date for submission of resolution plan by resolution applicants was April 16, 2020. But things have changed drastically following the outbreak of coronavirus. So, the investors may want to revisit their plans,” he added.
Taking into account the one-month nationwide lockdown period, the estimated date of CIRP closure, which started on December 3, 2019 and will end on May 31, 2020, will be June-end 2020. However, some bankers say the CIRP may get extended by 90 days.
“We can’t push it (DHFL) into a distress sale. We have to get a reasonable valuation. The resolution applicants can access the data room.
“Ideally, we would like investors to bid for the platform (DHFL as a whole, including retail and builder loan book),” the banker quoted above said.
Retail loan book
According to reports, resolution applicants are more inclined to bid for the retail loan book than the builder loan book as there is a fear of dud loans in the latter.
“Two dozen bidders had submitted EoI for DHFL... With the current business environment bordering on caution, it remains to be seen how many of the applicants will submit their proposed resolution plans,” said another banker.
Claims
As on February 19, 2020, the amount of claims by financial creditors, including banks and non-convertible debenture holders, admitted by the National Company Law Tribunal stood at ₹81,140 crore.
The claims by operational creditors, and employees and workmen that have been admitted stood at ₹24.93 crore and ₹2.2 crore, respectively.
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