The committee of creditors (CoC) of Reliance Capital (RCap) has said the proposed second e-auction, aimed at maximisation of proceeds, was not in deviation of the existing bankruptcy regulations.
The bids received during the resolution process were “sub-optimal” and the CoC exercised the commercial wisdom when it proposed the extended challenge mechanism. There was no error or violation of bankruptcy rules when the second challenge mechanism was proposed, according to the counsel for the lenders.
Further steps were necessary for value maximisation, the counsel informed the National Company Law Appellate Tribunal (NCLAT) on Friday. The appellate tribunal will continue to hear the petition, filed by the CoC against the National Company Law Tribunal (NCLT) order, on Monday.
In its February 2 order, the NCLT had declared the proposed second e-auction as a violation of bankruptcy rules. Further, the bankruptcy court termed Torrent Group as the highest bidder under the first challenge mechanism and directed the administrator to take the process to its “logical conclusion”.
The CoC had decided to conduct the extended challenge mechanism on the basis of a late bid submitted by IndusInd International Holdings (IIHL), the NCLT said in its order, adding that the extended challenge mechanism is a violation of Section 39 (1A) of the Corporate Insolvency Resolution Process.
The Hinduja Group had placed its bid through its group company, IIHL.
In its submission before the NCLAT on Thursday, Hinduja Group, another bidder for the entire assets of RCap, said it was is in favour of the second challenge mechanism as it would help maximise the value through the resolution process. The move supports the CoC’s stance, but was against that of Torrent Group which had opposed the second e-auction. In its filing before the appellate tribunal, Hinduja Group said it had offered Rs 9,000 crore in a “complaint fashion”. Under the first challenge mechanism, Torrent had presented a resolution plan with a net present value of Rs 8,640 crore, while that by Hinduja Group was at Rs 8,110 crore.