The administrator of debt-laden Reliance Capital (RCap) has proposed to hold the second round of challenge mechanism on January 23, but it would depend on the ruling by the bankruptcy court.
This comes after the National Company Law Tribunal’s (NCLT) Mumbai Bench said it would continue to hear the petition seeking a stay on the second round of the e-auction on Thursday.
RCap’s administrator told the tribunal that it will put a hold on the challenge mechanism till Monday and wanted assurance from Torrent Group and Hinduja Group–the final bidders– that they will not withdraw their bids.
The administrator also wanted both the bidders to maintain the bid amount they had quoted.
The lenders to the former Anil Ambani group company had earlier planned to hold the second round of e-auction, targeting proceeds of more than ₹10,000 crore from the insolvency process, on Thursday.
Torrent Investments, a group company through which Gujarat-based Torrent Group had placed its bid for RCap, had earlier moved NCLT terming as “illegal” the administrator’s decision to hold another round of challenge process .
IndusInd International Holdings (IIHL), the group company through which the Hindujas had placed bids, had also sought to be made a party in the case.
In his argument, Ravi Kadam, the counsel for the administrator, said the Torrent Group’s plea to stop the second auction had no legal validity. Further, under the Insolvency and Bankruptcy Code (IBC), the administrator had the “absolute right” to annul the resolution process, reject all resolution plans and call for new applications.
The counsel also stated that the administrator’s process was to maximise the proceeds from the insolvency process. When the process began the two bidders quotes were at about ₹4,000 crore and over the period of the insolvency process this rose to about ₹8,000 crore, he said, adding the Committee of Creditors (CoC) and administrator believe that there is further scope of improvement of the bid price.
“The discovery of further valuation is required and hence another round of auction is required,” he said, adding both the bids were “sub-optimal”.
Torrent had offered an upfront payment of ₹8,640 crore and that by Hinduja was at ₹8,950 crore, including ₹8,110 crore as an upfront payment.
The counsel for the CoC, senior lawyer Kapil Sibal, said there was no basis for the application filed by Torrent and it should be dismissed.
Earlier, senior counsel Mukul Rohatgi appearing for Torrent Group said that the lenders’ plans for fresh auctions were against the tribunal’s orders and there was also no guarantee that the second auction could be the last.