Reliance Capital’s CoC favours auction mode | The Financial Express

Reliance Capital’s CoC favours auction mode

To meet again on Friday to finalise the process

Reliance Capital’s CoC favours auction mode
The process advisor to the RCap’s bankruptcy was in support of the liquidation process under section 6(A) of the Insolvency and Bankruptcy Code (IBC), while the advisor to the CoC wants to close the insolvency process by awarding the bid to the highest bidder.

The committee of creditors (CoC) of Reliance Capital (RCap) has favoured the auction mode to complete the insolvency process of the debt-laden firm, voting against the liquidation process.

The CoC, which met on Tuesday, was of the opinion that the liquidation process would further deplete the firm’s value. The CoC will meet again on Friday to discuss the auction process for the former Anil Ambani group company, sources close to the development said.

The CoC has initiated discussions with bidders who had submitted their final bids in November.

“The meeting on Friday is to take a final call on completion of the bankruptcy process, even though the decision is to support auction mode. Liquidation will erode the company’s value further, while the insolvency process aims to maximise value to the financial creditors,” a source said.

The nearing of the deadline, which ends on January 31, also requires closing of the procedures at the earliest, he added.

RCap’s lenders and advisers were at loggerheads on the actions to be taken to complete the firm’s insolvency process, ahead of the CoC meeting. This followed a lukewarm response to the company’s insolvency process, with it getting only five binding bids. The deadline to submit the binding bids ended on November 28.

Also Read: Reliance Capital bidders raises multiple legal issues involving Rs 20,000 cr financial implication 

The process adviser to the RCap’s bankruptcy was in support of the liquidation process under section 6(A) of the Insolvency and Bankruptcy Code (IBC), while the adviser to the CoC wants to close the insolvency process by awarding the bid to the highest bidder.

KPMG is the adviser to the CoC, while Nageswara Rao Y of Deloitte is the process adviser to RCap’s administrator.

Last week, a joint venture by Cosmea-Piramal had submitted a binding bid of Rs 5,231 crore, the highest for RCap as a core investment company, followed by Hinduja Group at Rs 5,060 crore. Torrent Group’s bid was at Rs 4,500 crore and that by Oaktree Capital was at Rs 4,200 crore.

According to Duff & Phelps, an independent valuator of RCap has pegged the liquidation value of the firm at Rs 13,000 crore, more than double the value of the binding bids it received, while that by RBSA stood at Rs 13,200 crore.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 07-12-2022 at 03:20 IST