The committee of creditors (CoC) of debt-laden Reliance Capital (RCap) has decided to conduct the second e-auction on April 4, even as participation from Torrent Group remains uncertain due to lack of clarity on the outcome.
However, IndusInd International Holdings (IIHL), the firm through which the Hinduja Group had placed bids, intends to participate in the extended challenge mechanism. The firm, which had earlier informed the CoC of its plans to withdraw its revised bid, now intends to maintain the bid amount of Rs 9,000 crore in cash upfront, sources close to the development said.
IIHL’s confirmation saves RCap from a possible liquidation process. In case of no interest from bidders, the former Anil Ambani group company would face liquidation that would deplete the value of its assets. This would also result in forcing the lenders to take bigger haircuts.
“The auction date needs voting approvals from members of the CoC, and this has to be obtained soon. As of now, only one bidder – the Hinduja Group – has evinced interest in participating in the bidding process,” one of the sources said.
With interest from just one bidder, the fate of the second e-auction is also unclear as none of the earlier bidders – who had made earnest money deposits (EMDs) – has shown any interest in participating in the second e-auction. On the contrary, three earlier bidders – Cosmea Financial, Piramal Group and Oaktree Capital – have written to the administrator, seeking EMD refund of `75 crore each as they wish to withdraw from the resolution process.
The CoC was expecting to garner more than `10,000 crore from the extended challenge mechanism, and participants whose bids were earlier rejected by the CoC were also eligible to take part.
Last week, IIHL informed lenders of its intention to withdraw its post-auction revised bid. The company wanted to retain its earlier offer of `8,110 crore made at the time of first auction held on December 21, 2022, sources had told FE.
In its meeting last week, the CoC could not come to a conclusive decision on the date for the second round as lenders and bidders cited lack of clarity in its outcome or how a winner could be decided as the Supreme Court is yet to give its final order. The apex court is only slated to hear the matter in August.
According to bankers, at Friday’s CoC meeting, Torrent had suggested conducting a Swiss Challenge auction with its earlier bid of `8,640 crore as the threshold. If the lenders agree to this, Torrent will have the first right to match any counter offer from IIHL. The lenders are yet to hear from Torrent Investments, a group company through which the Gujarat-based Torrent Group had placed its bid for the entire assets of RCap, sources said.
RCap’s administrator was not in favour of the Swiss Challenge and suggested a closed envelope bid process, which was rejected by the CoC. Further, according to bankers, both the Swiss Challenge or closed envelope processes would go against the apex court’s direction that permitted conducting the extended auction.
On March 20, rejecting a petition filed by Torrent Group, the Supreme Court refused to stay a National Company Law Appellate Tribunal (NCLAT) order that permitted holding of a second e-auction for the bankruptcy firm.
RCap has been in insolvency since November 29, 2021, when RBI superseded its board. The insolvency process has been going on for nearly 483 days, which is much longer than the statutory time limit of 330 days.
