The administrator of Dewan Housing Finance Corporation (DHFL) R Subramaniakumar told lenders in a committee of creditors (CoC) meeting on March 12 that certain past transactions of the troubled mortgage lender may be ‘avoidance’ – a term used for preferential, undervalued, extortionate or fraudulent nature of transactions.
The view of the administrator is as per the initial Grant Thornton report, sources close to development told FE. The administrator had ordered three transaction audit reports by Grant Thornton to examine the suspicious transactions of the troubled lender. The final report is yet to be submitted to the administrator. As per Sections 43, 45, 50 and 66 of insolvency and bankruptcy code (IBC), the administrator can make application at National Company Law Tribunal (NCLT) to declare such ‘avoidance’ transactions as void and reverse their effect.
The administrator also informed lenders that he has received a letter from the Enforcement Directorate (ED) regarding certain observations on past transactions of the company based on their investigations. He has requested Grant Thornton to share a short report on the observations of ED so that they can file an application with National Company Law Tribunal (NCLT) as information provided by ED is very serious in nature, sources further added.
Interestingly, an email has also been received from former CMD Kapil Wadhawan stating that he wants to offer management comments on the transaction audit. The same has been communicated to transaction auditor. The administrator has informed lenders that a determination is required to be made by March 26 as to which transactions are of the nature of ‘avoidance’, as per the corporate insolvency resolution process.
The administrator also told lenders that Central Bureau of Investigation (CBI) has fled FIR against DHFL and requested certain documents from CoC. The lenders also discussed the revised evaluation matrix of bidders in the CoC meeting held on March 12. During the meeting, it was decided that 5% more weightage will be given to net present value (NPV) compared with the previous plan. The new evaluation criteria gives 40% weightage to NPV, 30% weightage to cash upfront, 10% for capital infusion, 5% to equity stake and remaining 15% evaluation will be done based on qualitative parameters.
FE has learned that 24 applicants had submitted expressions of interest (EoIs) for DHFL. The company had given the option to bidders to bid for the whole company or in parts. Under Option I, suitors were invited to submit EoIs for the entire business of DHFL. Under Option II, prospective resolution applicants were invited to submit EoIs for one or more groups or a combination of any assets in isolation across different groups of DHFL.
The troubled lender is undergoing a resolution process under the Insolvency and Bankruptcy Code, 2016, after the Mumbai bench of the National Company Law Tribunal (NCLT) admitted the case on December 2, 2019. The bids for the bankrupt mortgage lender are to be invited across three areas? retail, non-retail and slum rehabilitation authority (SRA) loans.
Source: Financial Express, March 19, 2020