While voting is underway on three plans submitted by Piramal Group, Adani Group and buyout fund Oaktree Capital in the hotly contested bankruptcy resolution, lenders are weighing which one could be accepted on all three points – financial, legal and regulatory – before you vote. , said industry officials who did not want to be identified.

According to the creditors’ quantitative assessment, Piramal’s bid scored 94 points compared to Oaktree’s 85 and Adani’s 79, people familiar with the matter said. Regarding the equity part, Piramal gets a 10 while Oaktree gets 2.6.

In absolute terms, Oaktree is considering a recovery of Rs 35,700 crore for creditors, Piramal’s is Rs 35,250 crore and Adani’s is Rs 32,860 crore.

A major concern for lenders would be Oaktree’s submission of a rating company review that suggests a triple A rating for its debt without revealing which agency it was. The Piramal Group entity Piramal Capital and Housing Finance is rated double A.

“Face value is not everything,” said one of the creditors who has a vote. “If a bidder offers you non-convertible debentures payable over a period of time, lenders need to see how the business will be managed during that period. Will it have sufficient equity to carry out its operations during this period? The marketing of NTMs and the liquidity of the secondary market must also be taken into account. Oaktree’s proposal contemplates issuing NCDs to lenders.

The Piramal Group and Oaktree are mutually contesting their claims to be the highest bidder. While the higher number on paper may sound like the best, the reality could be different due to payment terms.

Arpwood Capital advises Piramal on the transaction.

Unlike a corporate bankruptcy, the resolution of a financial services company is overseen by the Reserve Bank of India, which prioritizes financial stability when it comes to bailouts. While private equity fund JC Flowers submitted a bid for, the central bank ultimately chose a consortium of Indian banks.

“While on paper Oaktree’s bid may seem the highest, it may not in reality be given that it is more of a leveraged buyout on extremely thin equity which could make it unstable, ”said one creditor. “It may be the practice in the West, but the RBI is still conservative and may not want a financial services company that has already gone bankrupt to be on such a weak window.”

But Oaktree has threatened to take legal action against the creditors if the process is not satisfactory.

Creditors also doubt that the AAA credit rating given for Oaktree’s debt is real, or even sustainable, as rating companies are advised not to provide such signals.

Additionally, while Oaktree’s offer should be viewed favorably, it will fail to meet the need for lenders to close the deal as soon as unit insurance becomes a stumbling block.

Oaktree has proposed an alternative investment fund structure to overcome the 49% cap on foreign ownership, but rules from the Securities and Exchange Board of India could delay and complicate this process.

Since the process is being led by the administrator appointed by the RBI, where financial stability also plays a role, Piramal Enterprises, with recent capital increases of Rs 18,500 crore, could be considered favorably and a proposal to merge DHFL with it. – even is a factor that could comfort the regulator. .