The administrator and committee of creditors (CoC) of Reliance Capital (RCap) have approved releasing bank guarantees of three bidders that were submitted in lieu of the earnest money deposit (EMD). However, that of the Torrent Group would be released only after taking legal opinion on a case currently being heard before the Supreme Court.
These were a Rs 75-crore bank guarantee by Singapore’s Oaktree Capital, Rs 40 crore by Piramal Enterprises and Rs 35 crore by Cosmea Financial Holdings. The three firms did not take part in the extended challenge mechanism or the second e-auction, alleging lack of clarity in the process. They had also alleged that the CoC did not offer “finality” through the extended challenge mechanism.
The bidders had earlier sought assurances of “finality” of the insolvency process through the second e-auction, following which they would take a call on placing bids. On its part, RCap’s CoC expressed its inability to ensure the inclusion of a “finality” clause in the second e-auction, which was also opposed by RCap’s two largest lenders – Life Insurance Corporation of India and Employees’ Provident Fund Organisation. The lenders had a combined voting rights of 30% in the CoC and admitted claims of ₹8,200 crore.
Torrent Group’s bank guarantee of ₹75 crore would be released “later” after obtaining the legal opinion as the case filed by the Gujarat-based firm is pending before the Supreme Court. A ‘letter of urgency’ petition filed by Torrent Investments, a Torrent Group company, on October 3, 2023, seeking the Supreme Court’s intervention for an “urgent hearing and final disposal of all pending appeals”, is yet to be closed.
Generally, bank guarantees need to be released within 14 days of the bankruptcy process getting regulatory approvals. On February 27, the Mumbai bench of the National Company Law Tribunal approved the resolution plan submitted by Hinduja Group firm IndusInd International Holdings.