Piramal Group’s letter to creditors of DHFL protesting Adani’s ‘unsolicited’ bid

The Adani Group’s submission of bid to acquire the entire business of beleaguered housing finance company -– Dewan Housing Finance Limited (DHFL) — has upset the whole insolvency process with other bidders like Piramal Group, Oaktree Capital and SC Lowy threatening to pull out of the bidding process.

The three bidders have termed submission of the bids by Adani Group as unsolicited and not in accordance with the due process laid down by the law. Here we reproduce the letter written by the Piramal Group to the Committee of Creditors (CoC) protesting against the Adani Group’s bid for DHFL

Subject: Formal protest against submission of an unsolicited offer made by one of the resolution applicants

Dear Sir,

We understand that an unsolicited offer has been submitted by one of the resolution applicants (Offeree) to your office and/ or the Committee of Creditors (CoC) after 9 November 2020 (Resolution Plan Submission Date), pursuant to which, the Offeree has offered to revise its resolution plan and alter the Option/ Group under which its resolution plan was originally submitted, and the total resolution amount it is willing to pay pursuant to such resolution plan.

 At the outset, we would like to clearly state that the submission of such a resolution plan is neither in accordance with the provision of the revised request for resolution plan dated 16 September 2016 (RFRP) or the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, (CIRP Regulations). The manner and timing of submission of such a resolution plan is intended to disrupt and vitiate the process being followed under the current RFRP and undermine the considerable time and effort invested by us and other participants in submitting our resolution plans faithfully in accordance with the provisions of the Request for Resolution Plan (RFRP) and applicable law.

 The RFRP, read with the email dated 7 November 2020 from your office for submission of the revised resolution plan, does not provide any resolution applicant with the ability to (a) submit any unsolicited offer or a revised resolution plan after the Resolution Plan Submission Date, and (b) change the Group/ Option under which its resolution plan was originally submitted, to another Group/ Option after such resolution plan has been submitted. 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. It is clear that such an unsolicited offer by the Offeree is not in compliance with the requirements of the RFRP.

 Additionally, as you must be aware, pursuant to regulation 36B of the CIRP Regulations, the Administrator may, with the approval of the CoC, re-issue a request for resolution plans, only if the resolution plans received in response to an earlier request are determined to be unsatisfactory by the CoC in its wisdom, and subject to the condition that the request is made to all prospective resolution applicants in the final list. Therefore, 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 shall not be able to accept or consider any other resolution plan from any of the resolution applicants. Given that the unsolicited offer submitted by the Offeree is not in accordance with the process provided for under applicable law, it is clear that the Administrator and CoC will not have the ability to accept, examine and/ or consider such an offer.

 The Administrator and the CoC should also take into consideration that such an unsolicited offer has been submitted by the Offeree 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. Therefore, consideration of any new offer/ resolution plan which is submitted (i) other than in accordance with the provision of the RFRP and CIRP Regulations, and/ or (ii) 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.

Further, the manner in which the unsolicited bid has been submitted is neither in accordance with any procedure, either under RFRP, the CIRP Regulations, nor in accordance with the principals of natural justice. The timing of the submission of the unsolicited offer, which is a few days after the details of the revised resolution plans (including the financial proposals) of all resolution applicants have become widely available, is also extremely suspicious and seems to be designed to defeat and vitiate the efforts of the resolution applicants who have submitted compliant resolution plans in terms of the RFRP.  We do have reasons to believe that the details of our Resolution Plan (including the financial proposal) may have been leaked and have been considered for the purpose of making such an unsolicited offer. We would strongly urge the Administrator and the CoC to investigate whether there has been any breach of confidentiality with respect to the particulars of our Resolution plan and identify the source of such breach.

We would also like to highlight that we have invested considerable time, effort and cost in preparing and submitting our resolution plan on the Resolution Plan Submission Date and in compliance with the RFRP and applicable law. If any such offer which is not submitted in accordance with the provisions of the RFRP and CIRP regulations were to be considered, it would be a travesty of the resolution process and would vitiate the genuine and good faith efforts which have been undertaken by everyone concerned thus far.

Given that such an unsolicited offer has not been submitted in accordance with the provisions of the RFRP and the IBC read with the CIRP Regulations, we would urge 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 deviations from it. We hereby reserve all our rights under law and equity to seek appropriate redressal, including withdrawing from the current corporate insolvency process for DHFL, if the unsolicited offer of the Offeree is considered and/or the process set out the RFRP, the IBC and the CIRP Regulations is not duly followed .

Also read: The CIRP Status of DHFL