Debt-laden Reliance Capital’s (RCap) lenders have proposed to hold the second round of challenge mechanism, targeting more than ₹10,000 crore of proceeds from the insolvency process, on January 19.
However, this would depend on a crucial hearing by the National Company Law Tribunal’s Mumbai bench on Thursday. The bankruptcy court is slated to hear a petition filed by Torrent Group to stop the second round of challenge mechanism and another one on a revised bidding by Hinduja Group.
IndusInd International Holdings (IIHL), a group company through which the Hindujas had placed bids for the former Anil Ambani group firm, had also sought to be made a party in the plea filed by Torrent Group.
While the earlier bids by two finalists – Torrent (the highest bidder in the first challenge mechanism) and Hinduja (highest following the revised bid) – are being termed “null and void”, they would be eligible to bid in the second round. Further, participants whose bids were earlier rejected by the committee of creditors, including Cosmea Financial, Piramal Group and Oaktree Capital, would also be eligible to take part.
This is because of the Earnest Money Deposits they made at the time of submitting applications. However, the firms are yet to confirm their participation.
The proposal by CoC to hold another round of auction, which was approved by the lenders on Tuesday, was aimed at maximising the proceeds from the insolvency process.
Last week, Torrent Group had secured an interim stay from the bankruptcy court on declaring Hinduja Group as the winners, even as it revised its own bid with an offer to pay the entire bid amount of ₹8,640 crore in upfront cash. Hinduja’s offer of ₹9,000 crore on a Net Present Value (NPV) with an upfront cash offer of ₹8,800 crore, which was revised from ₹8,110 crore a day after the conclusion of the e-auctions, was still the highest.
The second challenge mechanism would be conducted with a reserve price of ₹9,500 crore, compared with the minimum threshold value of ₹6,500 crore in the first round that ended on December 21, 2022. The CoC also mandates that the bidders pay a minimum upfront cash payment of about ₹8,000 crore.