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In a win for the committee of creditors (CoC) of Reliance Capital, the Supreme Court on Monday refused to stay NCLAT’s March 2 order, allowing the lenders to go ahead with the extended challenge mechanism for the resolution process.
The apex court said that the CoC may go ahead with the second auction for value maximisation, which was the argument posed by Reliance Capital’s lenders in the NCLAT hearing.
CoC meeting
Since members need a two-day notice to convene a CoC meeting, lenders will meet on Tuesday to decide on the date for the next CoC meeting, likely to be held by the end of this week, sources told businessline.
The CoC will then finalise the date for the extended challenge mechanism, which is expected to be held in the coming week—most likely on March 29, according to sources.
Post the NCLAT order, the CoC had proposed holding the extended challenge mechanism on March 20; however, Torrent Investments submitted a plea in the Supreme Court, following which the apex court asked the CoC not to take any action until March 20.
The CoC had proposed setting the threshold bid amount at ₹9,500 crore on a net present value basis, above the highest bid of ₹8,640 crore submitted by Torrent in the first auction.
Lenders are now talking to all four original bidders that were supposed to take part in the first auction to ensure maximum participation and bids for value maximisation, industry participants said.
Under the bidding process for Reliance Capital, bids by four entities were approved for consideration. In addition to Torrent Investments, bids by IndusInd International Holdings, which is part of the Hinduja Group; US-based Oaktree Capital; and Cosmea Financial in collaboration with Piramal Capital, wherein the liability of Piramal Group was limited to Reliance General Insurance.
However, the latter two did not participate in the first auction, citing a high base bid amount and opaque auction guidelines, among other issues. Torrent Investments had won the first round of bidding, but the CoC decided to go ahead with a second auction, citing the bids received as sub-optimal and unsatisfactory.
This led Torrent Investments to drag the CoC to court, citing the IBC’s mandate of timely resolution under a clause that allows for either one challenge mechanism or one modification to the RFRP. It also challenged the revised bid submitted by the other bidder, the Hinduja Group, after the completion of the auction.
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