In a relief to Torrent Group, a bidder for the assets of debt-laden Reliance Capital (RCap), the National Company Law Tribunal (NCLT) on Thursday declared the proposed second e-auction a violation of the bankruptcy rules. Further, the bankruptcy tribunal also termed Torrent as the highest bidder under the first challenge mechanism and directed the administrator to take the process to its “logical conclusion”.
The move would further delay the insolvency proceedings of the former Anil Ambani group firm, as the administrator and the committee of creditors (CoC) are slated to move the National Company Law Appellate Tribunal (NCLAT), sources close to the developments said.
The CoC had decided to conduct the extended challenge mechanism on the basis of a late bid submitted by IndusInd International Holdings (IIHL), NCLT said in its order, adding that the extended challenge mechanism is a violation of Section 39 (1A) of the Corporate Insolvency Resolution Process (CIRP).“The CoC erroneously assumed commercial wisdom to run a second challenge mechanism despite concluding a fair and transparent challenge mechanism on December 21, 2022,” it added.The tribunal, in its 71-page order, also directed all the respondents, administrator and the CoC not to allow any deviation in the highest net present value (NPV) proposal of Rs 8,110 crore by IIHL, the firm through which the Hinduja Group had placed bids, and the highest NPV financial proposal of Rs 8,640 crore by Torrent.
Further, the resolution plan of IIHL, along with the original bid value of Rs 8,110 crore and not the enhanced value, should be placed before the CoC along with the final plan of Torrent, it said.Torrent had offered an upfront payment of Rs 8,640 crore and that by Hinduja Group, another bidder, was at `8,950 crore, including Rs 8,110 crore as an upfront payment.Torrent Investments, a group company through which the Gujarat-based Torrent Group had placed its bid for the entire assets of RCap, had earlier moved the NCLT, terming the administrator’s decision to hold another round of challenge process “illegal”.
The tribunal also stated that following the conclusion of the first challenge mechanism, the administrator had confirmed Torrent’s NPV bid of Rs 8,640 crore as the highest (in terms of the re-issued Request for Resolution Plan (RFRP).“It is further directed that the administrator shall take the resolution process of the corporate debtor (RCap) to its logical conclusion and the CoC in its own wisdom and absolute discretion shall take appropriate decisions to complete the Corporate Insolvency Resolution Process (CIRP)…,” it added.
The administrator of RCap had earlier proposed to hold the second round of challenge mechanism, which was later stayed by the tribunal, to maximise the process from RCap’s bankruptcy process. The lenders of the former Anil Ambani group company were targeting proceeds of more than Rs 10,000 crore from the insolvency process. On Wednesday, the bankruptcy tribunal granted a 45-day extension for the completion of RCap’s insolvency process, against the 90 days sought by the administrator, as the current deadline ended on January 31. The new deadline to complete the process now would be March 17.