After walkout fiasco, DHFL extends deadline for fresh bids to Dec 14

Value maximisation should be core principle: former AG Mukul Rohatgi

It is on the advice of former attorney general of India Mukul Rohatgi that the committee of creditors (CoC) to Dewan Housing Finance Corporation (DHFL) has sought fresh bids for the bankrupt housing firm.
 
Fresh bids are to come by December 14, thus giving an opportunity to all bidders.
 
The CoC had sought Rohatgi’s opinion after some bidders — Piramal Group, SC Lowy, and Oaktree — had objected to a far higher bid of Adani Group for the company and threatened to walk out of the process.
 
“The Administrator/CoC must open all revised bids received, including that of Adani, which is for the whole company. I note that this Adani bid has been received by the Administrator/CoC within the extended deadline of November 17. The idea under the IBC (Insolvency and Bankruptcy Code) is to have a healthy competition between resolution applicants and to ensure ‘maximisation of the value of the assets of the corporate debtor’ in public interest,” Rohatgi said.

 
“Keeping in view that Adani has made a revised bid, which I believe may even be drastically different from the earlier bid as it is for the whole company, it would be appropriate to give a fresh chance to other bidders to revise improve their existing bids and resolution plans and allow Oaktree, Piramal and SC Lowy to make revised bids for the whole company, if they so desire and are eligible to do so,” the senior advocate said in his opinion. The CoC must be fair and neutral and give seven days to all the four bidders, he said.
 
“I am saying so since the corporate debtor (DHFL) in this case does not have a single business portfolio, but has several businesses and subsidiaries and it has lenders of all types including public sector banks, private financial institutions, non-institutional debenture holders and deposit holders, etc. This would ultimately result in maximisation of the value of the assets of the corporate debtor,” he said.
 
In a communication to DHFL’s administrator on November 22, Adani Group had said it had followed the due process in the auction and offered the highest offer for the failed housing finance company so that the lenders got the maximum value for the assets. The group offered to put more money on the table after the three rival bidders threatened to walk out of the process.
 
The group said some of the rival bidders were preventing value maximisation for the lenders and their deposits should be forfeited for this.
 
State Bank of India, which has the largest exposure to DHFL at Rs 10,000 crore, is backing another round of bidding for the housing finance company. The Indian lenders, fixed depositors and provident funds have an exposure of Rs 94,000 crore.
 
In the Binani Cement insolvency process, a late but far superior financial bid by Aditya Birla Group’s UltraTech was not only accepted by the lenders but was upheld by the Supreme Court.