Business

DHFL lenders invite bids for various assets of the troubled mortgage lender

Updated : January 29, 2020 04:49 PM IST

The last date to submit EOIs for DHFL has been set for February 17.

To be eligible to bid for DHFL, lenders have laid out criteria that has to be met for bids to be considered.

Financial creditors alone have made claims of over Rs 86,892 crore against the company under IBC.

The RBI-appointed administrator for Dewan Housing Finance Limited (DHFL) on Tuesday invited Expressions of Interest (EOIs) from interested parties for submission of resolution plans for the troubled mortgage lender under the Insolvency and Bankruptcy Code (IBC).

R Subramaniakumar, the RBI-appointed administrator, invited EOIs on behalf of the committee of creditors under four categories, according to the documents released on the company’s website.

The last date to submit EOIs has been set for February 17. Under Option I, suitors are invited to submit EOIs for the entire business of DHFL as a going concern.

Under Option II, prospective resolution applicants are invited to submit EOIs for one or more Groups or a combination of assets in isolation across different Groups of DHFL. For this purpose, the administrator and committee of creditors of DHFL have categorised the business of DHFL into three Groups.

Group A comprises DHFL’s retail assets, investments, unsecured loans, fixed assets, etc, Group B comprises construction finance loans, mortgage loans, corporate loans, and inter-corporate deposits, pass through certificates (PTCs), Security Receipts (SRs), and Group C comprises of loans to projects related to the Slum Rehabilitation Authority, Mumbai, Government of Maharashtra.

CNBC-TV18 first reported on DHFL lenders looking to split the company into three parts, and invite separate bids for each business on January 17. Banking executives, privy to the matter, told CNBC-TV18 that splitting the businesses may help banks recover a higher sum of money by selling the company in its entirety.

However, bids for the entire company are likely to be given preference over bids for only one part of the business, according to one of the banking executives CNBC-TV18 spoke to.

The bid document released on DHFL’s website stated that the administrator and the COC “reserve their rights to accord greater weightage to EOIs under Option I. Further, in the event EOIs are not received under Option I or EOIs are not received for all the Groups under Option II, then the administrator and the committee of creditors reserve their rights to issue fresh invitation for EOIs with the objective of maximising value for all stakeholders and achieving a resolution of DHFL as a going concern.”

To be eligible to bid for DHFL, lenders have laid out criteria that has to be met for bids to be considered.

For private, public limited company, limited liability partnership (LLP), body corporate, any other potential resolution applicant (Category I), a minimum net worth of Rs 3,500 crore would be required.

For any financial institution, Investment company, fund house, private equity (PE) investor, non-banking financial company (NBFC), asset reconstruction company (ARC), the applicant (Category II) would have to have minimum committed funds of at least Rs 3,500 crore in the immediate preceding completed financial year.

Other general conditions such as eligibility under Section 29(A) under the IBC, fit and proper status have also been laid down.

Financial creditors alone have made claims of over Rs 86,892 crore against the company under IBC. Of which, Rs 80,979 crore claims have already been admitted.

DHFL is the first financial services company to be admitted to NCLT under the IBC for resolution under the newly introduced Section 227. The board of DHFL was superseded by the Reserve Bank of India earlier in November owing to governance concerns and defaults in repayments by the company, and sent to the NCLT thereafter.

R Subramaniakumar, the former managing director and chief executive officer of Indian Overseas Bank, had been appointed as the administrator for DHFL by RBI.

He is being advised by a three-member panel including Rajiv Lall, non-executive chairman, IDFC First Bank, NS Kannan, managing director and chief executive officer at ICICI Prudential Life Insurance, and NS Venkatesh, chief executive of the Association of Mutual Funds in India.

DHFL lenders invite bids for various assets of the troubled mortgage lender

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