Srei group receives two resolution plans

The administrator of bankrupt Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL) received two offers on Monday evening — one from Arena Investors in partnership with Varde Partners and the other from individuals — Shon Randhawa jointly with Rajesh Viren Shah, said people aware of the development.

Lenders are yet not certain if both the bidders would be eligible, as Shon Randhawa-led bidder has not submitted the earnest money deposit (EMD), while the Arenaled consortium has submitted the conditional EMD of Rs 150 crore.

Administrator Rajnish Sharma did not respond to ET’s request for comment. He had categorically stated that a bid would be eligible only if the resolution applicant meets all the terms of the request for proposal (RFP) which includes Rs 150 crore as EMD.

The twin Srei companies have close to Rs 2,100 crore of cash balance which will be distributed among lenders and would not be part of the resolution applicant’s offer.

As per the terms of the RFP, lenders would forfeit the EMD money if the Reserve Bank of India does not endorse the successful resolution applicant as ‘fit and proper’.

On August 19, the administrator extended the deadline by ten days since both the applicants refused to submit the EMD due to the clause that it could be forfeited. However, lenders insisted that they would not remove the RFP clause. According to bankers, the condition was imposed since the entire exercise would be wasted if the regulator did not endorse the bidder. “Such a condition would thus put the onus on the successful bidder to convince the regulator,” a bank official said.

Hemant Kanoria-promoted Srei Equipment Finance and Srei Infrastructure Finance were admitted for insolvency proceedings on October 4, 2021. The administrator has received claims of Rs 30,000 crore from financial creditors against the companies.

Last week, the administrator revised the terms of the RFRP, stating that the resolution applicant should assign a value to the proceeds that could be recovered from the transactions categorised as fraudulent, preferential, or avoidance.

Disclosures made by the administrator to the stock exchange show that consultant BDO India has classified several transactions totalling over Rs 5,000 crore as fraudulent.