MUMBAI: In a strategic move aimed at enhancing returns for its lenders, Aviom India Housing Finance has initiated a Swiss challenge auction. This decision comes after the committee of creditors (CoC) rejected the revival proposal from the company's promoters, signaling a shift towards a more competitive bidding process. The firm has enlisted the expertise of PwC to establish the auction guidelines, with the date for the e-auction expected to be announced soon.
The choice of the Swiss challenge mechanism allows the CoC to invite competing bids against an initial proposal, creating a robust framework for value maximization during insolvency resolution. As per sources familiar with the situation, the CoC is preparing to open the bidding process to potential investors who can either match or exceed the initial anchor offer. This transparent approach is anticipated to bolster recovery for creditors, ensuring they receive the best possible returns.
According to insiders, the CoC's decision to pursue the Swiss challenge route underscores its commitment to a fair and competitive auction process. Once PwC finalizes the challenge framework, the CoC is expected to act swiftly in outlining timelines and welcoming interested bidders. This proactive strategy is a reflection of the evolving landscape of insolvency resolution in India, where maximizing creditor recoveries has become increasingly prioritized.
The creditors recently dismissed a revival proposal from promoter Kajal Ilmi, who suggested a settlement of ₹1,385 crore over a period of 26 months, including an upfront payment of ₹350 crore. The rejection of this proposal indicates that creditors are seeking more viable and lucrative options. Recently, Unity Small Finance Bank has emerged as the leading contender in this bidding process, offering an upfront cash payment of ₹775 crore, while other bidders like Authum Investment & Infrastructure and DMI Housing are also in the fray.
As the auction date approaches, the market's eyes will be on how this Swiss challenge unfolds. The evolving situation reflects a broader trend in the Indian financial sector, where transparency and competition are becoming key elements in resolving distressed assets. For creditors of Aviom India Housing Finance, this Swiss challenge could prove to be a pivotal moment in securing significant recoveries from their investments.
