Reliance Capital’s (RCap’s) committee of creditors (CoC), which has proposed the second challenge mechanism for the entire assets of the debt-laden company, on Monday received 75% of votes in favour of the e-auction. The voting by lenders to conduct the second e-auction, from which the CoC is targeting more than Rs 10,000 crore of proceeds, will end on Tuesday.
RCap’s largest lenders, Life Insurance Corporation of India (LIC) and Employees’ Provident Fund Organisation (EPFO), who together have 35% of voting rights in CoC, have voted in favour of the second challenge mechanism, sources close to the development told FE.
LIC’s debt in RCap stands at Rs 3,400 crore, while that of EPFO is at Rs 2,500 crore. Both the firms had earlier rejected suggestions of a liquidation.
The proposal to conduct a second challenge mechanism requires to be approved by at least 51% of the lenders’ votes. With the votes in favour crossing the required limit, it seems like another e-auction is in the offing. The final results would be tabled before the administrator and CoC on Tuesday, sources added.
Meanwhile, the National Company Law Tribunal’s (NCLT’s) Mumbai bench refused to hear an urgent plea by Torrent Group to stop the voting process for the second round of auction. The tribunal will hear the matter on January 12.
The CoC and IndusInd International Holdings (IIHL), a group company through which the Hinduja’s had placed its bids, are also likely to be made parties in the matter. Last week, Torrent had secured an interim stay from the bankruptcy court on declaring Hinduja Group as the winner, and revised its earlier bid with an offer to pay the entire bid amount of Rs 8,640 crore in upfront cash.
Torrent, which had placed the bids through a group company – Torrent Investments – offered to pay Rs 3,750 crore in upfront cash and balance in deferred payments. 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 the e-auctions, is still the highest.
The CoC had decided to conduct another round of challenge mechanism to maximise the proceeds from the insolvency process. Apart from existing bidders – Torrent Group and Piramal Group – earlier aspirants, including Cosmea Financial, Piramal Group and Oaktree Capital, will also be eligible to take part in the second round.
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 that ended on December 21, 2022. This round, which is slated to be conducted on January 20, would also mandate the bidders to pay a minimum upfront cash payment of about Rs 8,000 crore.