Hinduja Group, a bidder for the entire assets of Reliance Capital (RCap), is in favour of the second challenge mechanism, as it would help maximise the value through the resolution process. The move supports the stance of the committee of creditors (CoC), but is against that of other bidder Torrent Group, which is opposing the second e-auction.
The CoC had decided to continue with the extended challenge mechanism as the bids received during the resolution process were “sub-optimal”.
Restraining the CoC in exercising the commercial wisdom and to achieve the object of maximisation of asset value was an error, the Hinduja Group said in its appeal filed before the National Company Law Appellate Tribunal (NCLAT).
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It also said the earlier order by National Company Law Tribunal (NCLT), which termed the second challenge mechanism as a violation of bankruptcy rules, halted the CoC’s decision to continue with the e-auction with a threshold value of ₹9,500 crore.
The Hinduja Group, which had placed its bid through a group company IndusInd International Holdings, reiterated its stance that Torrent’s petition in the NCLT was “non-maintainable”. The Hinduja Group said it is supporting the CoC’s decision for a second e-auction.
The appeal, along with a petition filed by lenders of RCap saying halting of the extended challenge mechanism will lead to an upfront loss of ₹5,010 crore, will come up for hearing on Friday.
In its filing before the appellate tribunal, Hinduja said it had offered ₹9,000 crore in a “complaint fashion”. Under the first challenge mechanism, Torrent had presented a resolution plan with a net present value of ₹8,640 crore, while that by Hinduja was at ₹8,110 crore.
Earlier, lenders led by Vistra ITCL (India) moved the appellate tribunal against the February 2 order of the NCLT that declared the proposed second e-auction as a violation of the bankruptcy rules. Further, the tribunal also termed Torrent Group as the highest bidder under the first challenge mechanism and directed the administrator to take the process to its “logical conclusion”.
The CoC had moved the appellate tribunal stating not holding another round of auctions would lead to an upfront loss of ₹5,010 crore. According to the CoC, RCap’s admitted debt is more than ₹25,000 crore, including public money, and the objective of the insolvency process was to pursue “value maximisation”.