The bid of Torrent Group for debt-laden Reliance Capital (RCap) is non-compliant with the insolvency process as there were discrepancies in its resolution plan, the counsel for the lenders informed the bankruptcy court. The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday adjourned the hearing of the plea challenging the proposed second e-auction to January 16.
The committee of creditors (CoC) had come to the conclusion that Torrent’s plan was not compliant with the process. The administrator on January 4 had written to Torrent stating that the net present value (NPV) in the draft resolution proposal did not match with that in the highest bid amount submitted by the company during the challenge mechanism, senior counsel Kapil Sibal, who appeared for the CoC, said.
Following the January 4 letter, Torrent submitted a renewed bid on January 6, he said, adding Hindujas in its revised offer, was offering Rs 1,000 crore more than Torrent.
Asking why the lenders should not be denied the benefits of maximisation of the proceeds, Sibal said the challenge mechanisms do not confer any rights on any resolution applicant, even for the one with the highest NPV. The CoC is also not obligated to approve any resolution plan, either with the highest NPV or the highest score under the evaluation matrix, he added.
Separately, the NCLT will hear the petition filed by Torrent Investments, the group company through which Torrent had placed bids for debt-laden RCap, again on Monday. The matter was adjourned since the Hinduja Group, another bidder in the fray, and the CoC had sought additional time to file replies.
The next hearing comes ahead of the January 19 date set by the CoC to hold the second round of challenge mechanism, targeting more than Rs 10,000 crore of proceeds from the insolvency process.
Also read: Traders expect Rs 13 lakh crore business this wedding season: CAIT
Senior counsel Darius Khambata, who represented Torrent, argued that the proposed auction on January 19 was a “brazen attempt” to conduct the second round of challenge mechanism. Further, this was also against the earlier tribunal order, which had stayed the bankruptcy process till Thursday’s hearing.
IndusInd International Holdings (IIHL), a group company through which the Hindujas had placed bids for the former Anil Ambani group firm, had also sought to be made a party in the plea filed by Torrent Group.
The CoC had cancelled the bids by the two finalists — Torrent (the highest bidder in the first challenge mechanism) and Hinduja (highest following the revised bid) – during the first round of the e-auction. However, they would be eligible to bid in the second round, while others such as Cosmea Financial, Piramal Group and Oaktree Capital would also be eligible to take part due to the earnest money deposit they made at the time of submitting applications.