DHFL Resolution: Bids Abysmally Low, Says Promoter Kapil Wadhawan
DHFL logo seen through a tyre. (Source: BloombergQuint) 

DHFL Resolution: Bids Abysmally Low, Says Promoter Kapil Wadhawan

Kapil Wadhawan, the promoter of Dewan Housing Finance Corp. Ltd., has approached the National Company Law Tribunal seeking permission to participate in the resolution process of the company.

In his application, Wadhawan said the bids received during the resolution process of the company are abysmally low and cannot ensure the maximisation of the value for the company.

For instance, he said, Oaktree has bid Rs 31,000 crore for the entire company. Out of this, only one-third is payable upfront and the balance is deferred payment. This deferred payment, according to Wadhawan, is payable over several years from DHFL’s accruals itself. But the value of DHFL’s assets, he pointed out, comes to Rs 68,000 crore.

In fact, some newspaper reports suggest that a significant part of the upfront amount will be discharged from the cash available with DHFL itself with only a few hundred crores, if any, being put in by the bidders. Essentially, the bidders are seeking, with barely any investment, to take over the company using resources of DHFL itself while offering a massive haircut on the amounts due to the various creditors of DHFL.
Petition filed by Kapil Wadhawan

This, Wadahwan argued, requires the intervention of the NCLT.

He requested the NCLT to:

  • Direct the committee of creditors to consider the settlement offer submitted by him.
  • If not, then appoint an independent expert to examine all the bids received for the company and submit its report to the NCLT.
  • Allow him to address and assist the committee of creditors as it considers the bids received for the company.
  • Allow him access to all the documents and records of DHFL and direct the creditors’ committee to defer considering any bids until this petition is decided.

The committee of creditors on its part has already pushed back against the settlement offer by the promoters including Kapil Wadhawan.

On Nov. 11, 2020, Wadhawan had sent another letter to the Reserve Bank of India-appointed administrator seeking to participate in the resolution process. Wadhawan in his letter had offered DHFL equity to all creditors, including retail depositors and holders of non-convertible debentures, through the conversion of debt to equity.

The RBI had directed initiation of insolvency resolution process against DHFL in November 2019 and appointed an administrator for the company. A month later, the NCLT had admitted the insolvency application against the company and the bidding process was initiated soon after.

DHFL had received resolution plans from four bidders—Oaktree Capital Management, Piramal Group, Adani Group and SC Lowy. The NCLT has not yet announced a date of listing for Wadhawan’s plea.

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