The Piramal Group has received the approval from Reserve Bank of India (RBI) to acquire Dewan Housing Finance Corporation Ltd (DHFL) under bankruptcy law. DHFL was the first finance company to be referred to NCLT by the RBI using special powers under Section 227 of the IBC (Insolvency and Bankruptcy Code). Before that, the company’s board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC). The central bank has, however, declined to transfer DHFL’s deposit-taking license to Piramal Group as part of the takeover.

The saga of the DHFL resolution has been a long drawn one. There were multiple bidders on the fray, but it came close for two– Oaktree Capital and Piramal. The chronology of events and the bidding and revised bidding process talk about the intense process.

On November 29, 2019, DHFL was admitted for resolution under the Insolvency and Bankruptcy Code. Then on February 17, 2020, the company received an expression of interest from over two dozen companies. and a month later, Oaktree Capital submits bids for the entire loan book. Similarly, Piramal Group, Adani Group, and SL Lowy bid for distinct parts of the loan book.

In October 2020, all the bidders sweeten their offers after financial creditors say they are not happy with what was offered. Subsequently, only three out of four bidders submit fresh bids On November 15, Adani Group proposed to change its offer materially by offering to bring the entire loan portfolio as compared with previous offer to buy just the wholesale portfolio. In November last year, Piramal Group protested Adani Group’s change in bids and challenged to seek legal resolution to the issue. However, in December last year, the financial creditors voted to write fresh bids for all bidders, and they removed credit limits on assets where bidders could bid for. Creditors also sought clarification from the three bidders which include valuation of insurance venture and treatment of additional interest income. After the three bidders — Piramal Group, Adani Group and Oaktree — submitted their bids, the lenders began a discussion in December last year on the commercial aspect of the bids.

Then on December 24, Oaktree increased its bid by Rs 1,700 crore. as additional interest income to financial creditors. With this offer, Oaktree Capital total bid for DHFL was at Rs 38,400 crore. The increase in the offer came after rival bidder Piramal Capital and Housing Finance offered to increase the interest income by a similar amount. Desperate to win the bid, Oaktree writes to lenders again in December end that its bid was misrepresented and warns of legal consequence if it is not allowed to change its bid. To that, Piramal Group wrote to financial creditors warning them against accepting Oaktree’s amended offer. Finally, Piramal’s offer was accepted.

To be sure, Piramal Enterprise and Oaktree were engaged in an intense bidding war to take control of DHFL, which was referred to a bankruptcy court in December 2019 after it was seized by RBI. The lenders have had to redo the voting process six times as new bidders emerged, and existing bidders changed offers.

Cases against DHFL

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