In a new twist to the Reliance Capital (RCap) tale, its committee of creditors (CoC) has decided to conduct another round of challenge mechanism, targeting more than Rs 10,000 crore of proceeds through the insolvency process. A number of bidders, including Cosmea Financial, Piramal Group and Oaktree Capital, will be eligible to take part in the second round of e-auctions, apart from the existing bidders.

The second challenge mechanism would be conducted with a reserve price of Rs 9,500 crore, compared with the minimum threshold value of Rs 6,500 crore in the first round. This round would also mandate that bidders pay a minimum upfront cash payment of about Rs 8,000 crore, sources close to the development said. Under the new mechanism, participants will have an option to up the bid amount by a minimum Rs 500 crore in the first round. This will increase the minimum bid amount to Rs 10,000 crore.

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RCap’s lenders will meet on Monday (January 9) to vote on the proposal to conduct the second round, which is likely to be held by January 20.

“The next round of e-auctions is being mulled as lenders are not satisfied with the commercial viability of the existing bids it received from Torrent Group and Hinduja Group through the first round of the challenge mechanism. Further, the second attempt is also to maximise the value of the stressed assets and reduce the haircut the lenders would have to take,” one of the sources said.

According to the CoC, RCap’s liquidation value was pegged at about Rs 13,000 crore and fair value was at Rs 17,000 crore.

A number of bidders, including Torrent (the highest bidder in the first challenge mechanism), Hinduja (highest following the revised bid), Cosmea, Piramal and Oaktree, are eligible due to the earnest money deposits they made at the timing of submitting applications. However, their participation would be only confirmed after the CoC decides on the second round of e-auctions.

Last week, Torrent Group – which had secured an interim stay from the bankruptcy court on finalising the bids by Hinduja Group – had revised its earlier bid with an offer to pay the entire amount of Rs 8,640 crore in upfront cash. This came as a surprise as Torrent had earlier termed Hinduja Group’s revised bid as a “blatant and arbitrary violation” of the challenge process.

Torrent had earlier placed a Rs 8,640-crore bid through a group company, Torrent Investments, to acquire RCap’s entire assets, and offered to pay Rs 3,750 crore in upfront cash and the balance in deferred payments.

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Hinduja’s offer of Rs 9,000 crore on a net present value (NPV) with an upfront cash offer of Rs 8,800 crore, which was revised from Rs 8,110 crore after conclusion of e-auctions, is still the highest.

On January 3, the NCLT had directed RCap’s lenders not to accept Hinduja Group’s revised offer till further orders. The Mumbai bench of the bankruptcy court is slated to hear the petition on January 12. The tribunal had also asked the administrator to file a reply on Torrent’s petition. Following the order, the CoC has sought time to move the National Company Law Appellate Tribunal.

The present deadline to conclude the process is January 31, while the CoC is also planning to file an application with the NCLT’s Mumbai bench to extend the timeline to February 15.