The deadline for submission of final or binding bids, under the insolvency proceedings for Reliance Capital, is likely to be extended beyond October 31, according to industry sources.

This follows the National Company Law Tribunal’s decision on Tuesday to extend the last date for completion of the insolvency process to January 31 from November 1.

“There wasn’t an option before due to the NCLT deadline. But because of the extension in place, the CoC is now speaking to the bidders, and may take a call on the extension of the timeline,” said a source with knowledge of the matter.

Initial bidders for Reliance Capital has sought an extension in the timeline for submitting final bids, citing the need for more time for necessary due diligence. While various bidders were reported to have sought extensions of 4-10 weeks and even going up to January, the deadline was extended only by a month to October 31 due to the NCLT deadline.

Aditya Birla Capital, the latest entrant that has submitted a bid for Reliance Nippon Life Insurance, will also be required to submit its final bid within the final deadline, whichever the date may be, according to sources.

Individual bids

During the period of submission of initial or non-bidding bids — which ended on August 29 — the CoC had received 14 bids for Reliance Capital, which included six bids for the Group, and several bids for individual assets such as the general insurance, asset reconstruction and securities businesses.

The CoC will look to consider all the bids received and if the individual bids offer better value, they will be selected, sources said. They added that in case the Group-level bids are better, the CoC might also consider clubbing or stitching the individual bids together under the resolution plan, and then valuing them as part of the cluster.

Industry sources have also suggested that the administrator of Reliance Capital has approached the Reserve Bank of India seeking reconstruction of Reliance Capital into four core investment companies (CIC) for easier resolution.

The proposed structure is aimed at circumventing the IRDAI mandate which states that equity infused by promoters and other investors in insurance companies, including private equity funds, will be locked-in for five years from the time of getting the final approval.

The four CICs are proposed as Reliance General Insurance Company; Reliance Nippon Life Insurance Company; Reliance Commercial Finance and Reliance Home Finance; and the fourth which will include all other businesses including securities, asset reconstruction, private equity and real estate investment,sources said. However, other sources close to the resolution process, said that there were no plans to put the assets under different compartments .

Related Topics
comment COMMENT NOW