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Oct 28, 202310 min read

THE NARRATIVE(S) OF DHFL “BETTING”, SORRY BIDDING!

Posted on 28/10/2023 (GMT 08:30 hrs)

INTRODUCTION

In this article, we are talking about DHFL betting (sorry for the Freudian slip) “bidding”! This type of Freudian slip is usual now as all the euphemisms are supplemented by unparliamentary (?) words. Two examples of this may be given from our legislature:



When “racing” is supplemented by “trading” in the case of human behaviour of trading MLAs and MPs by dint of money-signifiers, the word “betting” can also be used, despite its non-applicability in the “great” (?) bidding of the insolvently solvent DHFL. Moreover, we are emphasizing on the word “horse”, taking cue from the Kaṭhoponiṣad, where the word “horse” is used in different connotations in different discursive formations of a single text. It is just like holding a horse’s reins, which indicates the desiring homo consumens. Even in the case of inverted Aśvattha tree as mentioned in the Kaṭhoponiṣad, the compound Aśvattha means not only a botanical referrent (Ficus religiosa Linn), but the locus of desiring horses, i.e., indriya-centric/sensual desires.

The following narrative is contrary to the Sangh Parivar‘s ethos or ideology.

A VERY BRIEF HISTORY OF THE DHFL BIDDING PROCESS

Source and Acknowledgment: Explained: The resolution process of DHFL debt and why it is important VIEW HERE ⤡ (As reported on 8th June, 2021 ©The Indian Express)

DHFL was the first NBFC to come under the purview of the the insolvency resolution under Section 227 of the Insolvency and Bankruptcy Code by the regulator: the Reserve Bank of India.

…the government had notified rules for the insolvency proceedings of financial service providers in November 2019 to enable the initiation of the insolvency process/corporate insolvency resolution process (CIRP) of the DHFL, which had defaulted on its payment obligations.

For the entire chronology of the DHFL Scam till date, view the following:


THE CHRONOLOGY OF THE DHFL SCAM

A WHITE PAPER ON THE DEWAN HOUSING FINANCE CORPORATION LTD. (DHFL)

The Reserve Bank of India initiated insolvency proceedings against DHFL after replacing the earlier board of directors of the same in November 2019.

THE LIST OF BIDDERS

Besides the Piramal group, the Oaktree group, Adani group, and Hong-Kong-based SC Lowy had also placed bids for DHFL in four rounds of bidding. The Piramal Group’s bid of Rs 37,250 crore with an upfront payment of Rs 12,700 to creditors emerged as the winning bid in January after receiving approval from 94 per cent of the Committee of Creditors (CoC).

AN “OBSTACLE” FOR THE DHFL-COC

DHFL promoter Kapil Wadhawan had in November 2020 offered to pay 100 percent repayment of Rs 91,158 crore to all the concerned creditors. Wadhawan raised issues about the suitability of the bid by the Piramal group, suggesting that the bid by the company was not attractive as its resolution plan was dependent on the ability to merge DHFL with Piramal Capital and Housing Finance Ltd (PCHFL) and raised the question on if the resolution plan would proceed if such a merger was not approved by regulators.

In May, the Competition Commission of India approved the merger of DHFL with PCHFL.

[However, the above “approval” had a hypothetical remark that stated: “This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.” (Point No. 15) This leaves the room for contingencies in the so-called “acquiring” of the DHFL by Piramal.]

The Mumbai bench of the NCLT, however, directed the CoC to assess the offer made by Kapil Wadhawan. The RBI and the CoC challenged the order as unlawful before the National Company Law Appellate Tribunal (NCLAT) which stayed the order allowing the resolution process for DHFL to continue.

Kapil Wadhawan moved the Supreme Court to challenge the stay order on the evaluation of his offer for the resolution of DHFL.

Government officials told The Indian Express that the insolvency law was clear and that an acceptance of Wadhawan’s offer was not possible without approval from the RBI which had initiated the process.

“Any withdrawal of an insolvency process under Section 227 of the IBC would require the approval of the regulator which is the RBI in this case and the RBI has already stated that it has no intention of allowing the withdrawal of the insolvency proceedings,” said a government official who did not wish to be quoted.

A FEW REMARKS

It is surprising to note that the dealings between DHFL’s “former” (?) promoter and its investors or creditors are smooth as Kapil and Dheeraj Wadhawan promised to give the dues of FD and NCD Holders in full. However, a conglomerate of third party is intervening to stop the payment of the DHFL FD and NCD holders. So, you may say “jab miya-bibi raazi, to kya karega kaazi”? (When the bride and groom are in agreement, what is the need for the priest?), i.e., the intervention of the “kaazi” or the priest in this case, viz., the RBI-appointed CoC and the other bidders, is redundant.

This unnecessary intervention leads to a difficult situation for the FD and NCD holders of the DHFL. The RBI along with the government are putting the guinea pigs in the ill-conceived experimental box of “IBC” (2016) by the pigs, who are more than equals in the animal farm! Mr. Ajay Piramal also talked about the role of “animal instinct” in the world of business, following the footsteps of Keynesian economics!

The corporate subsume the “animal domain” and focus on the so-called “beastly aspect” of a rushing competitive spirit (“The Hobbesian Savage”) in the sphere of entrepreneurial innovation. Science-as-commerce and the commerce-as-science take a retreat to the mythical “state of nature” that is perturbed by confusions and cut-throat struggles of “might is right” and “ends justifying the means”, drifting away from the scientific rationality as defined by the Enlightenment. Uncertainty yields competition, competition is legitimized through the foregrounding of the so-called “animal”, which is nothing but the cannibalistic nature of the capitalist him/herself. The projection cum superimposition of the corporate savagery onto the animal world and the reverse reflection of the same to the end of the corporate is evident here. This type of attitude leads to a state, which was identified by Guattari as “chaosophy”, in which case, the irrational appears as rational (or “deliriously rational”) through the conditioning of the corporate gaze and/or vice versa.



It is to be noted that when the first NCLT order saw the light of the day, the hopeless RBI-appointed CoC said that this type of verdict would create a “bad precedent” in the augmentative process of legitimizing the IBC (amended at least 35 times already!):

“Lenders said the NCLT order may set a bad precedent, with more promoters moving the court to consider their offer.”

“That if the impugned orders were allowed to operate, it would be extremely prejudicial as it creates a new process, which is contrary to the express provisions of the Code and, if allowed, the CIRP will be never ending where parties will be permitted to keep making offers without regard to sanctity of the process or timelines, including after CoC has exercised its commercial wisdom and approved a plan, which has been submitted by an eligible resolution applicant in compliance with the Code,” DHFL’s lenders said in their appeal.”

SOURCE: Appeals Court Stays Order on Wadhawan VIEW HERE ⤡ (As reported on 26th May, 2021 ©The Mint)

Therefore, the guinea pigs of this code are in the laboratory state of science-as-commerce.

  1. The DHFL Sale: Transparency Is Dead; Long Live Transparency! VIEW HERE ⤡ (As reported on 7th December, 2020 ©BW Business World)

  2. Section 29A and the Changing Landscape: The DHFL Saga VIEW HERE ⤡ (As reported on 30th May, 2021 ©Indian Corp Law)

FEW EXCERPTS FROM THE NCLT FIRST ORDER (19/05/2021): THE “REJECTED” RESIDUE

Now we must turn to NCLT’s first verdict at the end of the bidding process in response to DHFL’s “former” (?) promoter Mr. Wadhawan’s urgent appeal. It exposed the undervaluation and biased pre-approval of a certain resolution plan in favour of a politically patronized corporate tycoon, who himself was allegedly involved in insider-trading, eco-terrorism and Flashnet Scam⤡.

Look at Wadhawan’s bid for DHFL: NCLT VIEW HERE ⤡ (As reported on 20th May, 2020 ©TOI)

“…the Applicant (Mr. Kapil Wadhawan) learnt from the press that bids were to be received by DHFL in furtherance of the CIR Process. In an attempt to ensure that the real value of the properties of DHFL in respect of which the bids would be received, the Applicant addressed a letter dated 17th October, 2020 to the Respondent No. 3, Respondent No. 1 and Respondent No. 2 apprising them of the real value of the assets of DHFL and thereby ensuring full principal repayment. However, as far as the Applicant could ascertain from information available in the public domain, the proposals received from various Resolution Applicants did not even remotely reflect the true value of DHFL and its assets. In an attempt to maximise the value of the Corporate Debtor’s assets, the Applicant, inter alia, addressed letters dated 11th November 2020 and 28th November, 2020 indicating what in its view is the true value of the company and the cashflow it was capable of generating. These letters were instrumental in an enhancement by the bidders of their bids which, however, remained absymally(sic.) low. From what the Applicant could ascertain, the offers assigned no real value to the wholesale portfolio of DFIFL(sic). The offers would, if accepted, constitute a windfall for the bidders while compelling the creditors of DHFL including the public (who hold about approximately 60% of the secured debt) to take a steep haircut (nearly 60-70%) on their outstanding. The offers, as they stand, would also not require the bidders to bring any funds of their own, but to finance their proposals entirely from the internal accruals of the Corporate Debtor.” (NCLT First Verdict, 19/05/2021, pp 4-5)

“In the present case, considering the peculiar composition of the creditors of DHFL, it is imperative for the 2nd Settlement Proposal to be placed before the CoC for their consideration on merit. The banks constitute only 35 % of the debt of DHFL. There are tens of thousands of fixed deposit holders and retail NCD holders all of whom are creditors of DHFL and are being kept in the dark in relation to the proposal made by the promoters. ln fact, only two members of the CoC have appeared before this Tribunal in the present Application. The other constituents of the CoC are unrepresented. It is in the interest of all stakeholders including, inter alia, the members of the public who constitute the vast majority of the creditors of the Corporate Debtor that the 2nd Settlement Proposal at least be considered on merits. All that the Settlement Proposal seeks to do is to maximise the value of the company with a view to ensure an optimal return to its creditors and to prevent any bidders from making windfall gains by a gross undervaluation of the assets of DHFL. If the Respondents are indeed desirous of maximising the value of the Corporate Debtor as part of the CIRP, they can hardly object to a consideration of the 2nd Settlement Proposal.” (ibid., p. 11)

“…the CoC ought not to take a decision on the Resolution Plans or to declare any of the Resolution Applicants a successful bidder without taking into consideration the 2nd Settlement Proposal submitted by the Applicant and voting/deciding upon the same.” (ibid., p. 13)

“From, the Settlement Proposals it is noted that the Applicant has offered approx. Rs 91,158 crores which is more than Rs. 54,512 crores of the next highest bidder who offered Rs. 37,250 Crores. Since this settlement proposal is substantially higher / more than 1 1/2 times of the value of the highest bidder the same needs due consideration/reconsideration by the Administrator/COC. Upon perusal of his letters/ Settlement Proposal it is noted that an amount of approx. Rs. 9,062 crores lying with the Corporate Debtor as on 30 September 2020 as per the balance sheet of the Company will be utilised fully for upfront repayment of the outstanding debts of small investors and the major breakup would be to NCDs held by public an amount of approx. Rs. 1,340 crores, towards ECB approx. Rs. 2,747 crores and public deposits of approx. Rs. 5,287 crores. It appears that with the settlement proposal thousands of the small investors, Fixed Deposit holders would be paid fully thereby thousands of small investors would get hundred percent (100%) of their principal sum outstanding.” (ibid., p. 40)

It becomes quite clear from NCLT’s “rejected” (since it was immediately stayed by the NCLAT on 25/05/2021 after a hurried appeal by Piramal and the CoC) enunciation that the DHFL-CoC did not care about the highest bidder, viz., Oaktree Capitals, but instead chose Piramal and eliminated considerations about the Wadhawans altogether.

“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.” Yet, upon Piramal’s written requests, Adani was removed from the race.

Why Adani Group’s revised bid for DHFL upsets other bidders VIEW HERE ⤡ (As reported on 18th November, 2020 ©Business Today)

CONCLUSION

It is no doubt that Mr. Piramal’s way is not only bumpy ⤡, but also slippery! All know that the NCLT first order and the NCLAT second order (27/01/2022) are speaking the truths about the RBI-appointed CoC’s resolution process and resolution plan.

However, both of the orders were “rejected” by the trivial way of dealings of Piramal with the kind help of his secondary kin Mr. Mukesh Ambani and the current ruling party of India through a farcical, predetermined Resolution Process. Without such favour, Piramal cannot get the “blanket” (?) stay order⤡ from the SC (11/04/2022; in response to NCLAT’s second order) so quickly when thousands of cases are waiting to be heard at the apex court years after years.

NOTES ON SOME TECHNICAL TERMS

FREUDIAN SLIP: A Freudian slip is a verbal, written or memory mistake linked to the workings of the unconscious mind. It is also designated as parapraxis. These slips supposedly reveal secret, repressed thoughts and feelings that people hold in the nearly unreachable regions of mental topography. Typical examples include an individual calling their spouse by an ex’s name, saying the wrong word, or even simply misinterpreting a written or spoken word.

RESIDUE: A Lacanian Term. The ignored portion of the unconscious where the repressed “remainder” lies for “reminding” the action of a being without the same being noticed by the being due to the foreclosure of psychosis.

CHAOSOPHY: “Everything is rational in capitalism, except capital or capitalism itself. The stock market is certainly rational; one can understand it, study it, capitalists know how to use it, and yet it is completely delirious, it is mad. That’s why we say: the rational always is the rationality of an irrational.” ⤡

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