The Adani Group's 'revised' bid for housing finance company DHFL, which is currently undergoing insolvency proceedings, has upset other bidders such as the Piramal Group, Oaktree Capital and SC Lowy, who have now threatened to withdraw their bids.
Why are other bidders in the race to acquire DHFL (either its retail business or the combined business) not amused with Adani Group's bid for the housing finance company?
A letter written by Piramal Group to the Committee of Creditors (CoC) of DHFL gives a clue. The Piramal Group calls the Adani's bid unsolicited and not in accordance with any procedure laid down by the Corporate Insolvency Resolution Process (CIRP) regulations.
The letter points to the fact that the Adani Group submitted the revised resolution plan after the resolution plan submission date and that the revised plan changed the Group/Option under which its resolution plan was originally submitted to another Group/Option.
The letter also alleged that the revised plan submitted by the Adani Group has failed to fulfill requirements as laid down under the Request for Resolution Plan (RFRP) regulations.
"The RFRP also requires the resolution applicant to fulfill certain conditions as part of the submission process (including submission of a commitment letter in relation to the total resolution amount offered by the resolution applicant and earnest money in relation to the Group/Option for which such resolution plan is being submitted), which we understand have not been fulfilled by such offeree (Adani Group). It is clear that such an unsolicited offer by the offeree is not in compliance with the requirements of the RFRP," says the letter.
The Adani Group was earlier offering Rs 2,700 crore for the slum redevelopment and wholesale loan book of DHFL. Later, on November 9, it revised its bid to Rs 31,250 for the entire loan portfolio.
Piramal Group had earlier offered Rs 15,000 crore for the retail loan portfolio, Oaktree had offered Rs 27,800 crore for the entire loan portfolio while SC Lowy Rs 2,300 crore for non-slum redevelopment authority loan book of the company. Later, Piramal Group revised its bid to Rs 26,500 crore and Oaktree to Rs 31,000 crore.
The letter by Piramal Group also says that as per provisions of the insolvency law, the administrator can reissue a request for resolution plan only if the resolution plans received in response to an earlier request are found to be unsatisfactory by the Committee of Creditors, and that the request is made to all prospective resolution applicants in the final list.
Therefore, the Piramal Group argues, that unless the CoC determines in its wisdom that none of the resolution plans currently submitted are satisfactory and subsequently, reissue a request for resolution plans, the Administrator should not be able to accept or consider any other resolution plan from any of the resolution applicants.
The letter also points out that the revised offer by Adani Group was submitted by after all other resolution plans, and all terms and conditions (including the financial proposals) of such resolution plans, have been disclosed to the CoC and have become widely available.
It contends that consideration of any new offer/resolution plan which is submitted other than in accordance with the provision of the RFRP and CIRP Regulations, and/or after the details of other resolution plans have been disclosed to the CoC and have become widely available, will be extremely prejudicial to the interests of the other resolution applicants who have submitted their resolution plans in accordance with the RFRP and applicable law.
The Piramal Group has, therefore, urged the administrator and the CoC to disregard such an offer and continue with the corporate insolvency resolution process as prescribed under the RFRP without any deviation.