The CoC (committee of creditors) of Reliance Capital met on Friday to discuss the e-auction process for resolution of the company, which is expected to be conducted in the third week of December.

The proposed date for the e-auction was December 19, but it could be a few days on either side, and the final decision on the date and other details will be taken at the next meeting on Tuesday, sources told businessline.

This will be the first time an e-auction process of this scale and magnitude is being undertaken for resolution under the IBC (Insolvency and Bankruptcy Code).

E-auction

As per industry participants, the base or reserve price for the e-auction process is reportedly around ₹5,300 crore, more than the highest bid of ₹5,231 crore submitted jointly by Cosmea Financial and Piramal Capital. As per the combined bid, the liability of Piramal Capital will be limited only to Reliance General Insurance.

The e-auction process will be based on the ‘ascending model’ where the base bids required to be submitted increases in each round. Depending on the interest and kind of bids received, the number of rounds will be decided upon and may be increased, a source said.

The decision for the e-auction process was taken at the behest of the two largest lenders — Life Insurance Corporation of India and EPFO — that collectively hold 35 per cent of the voting rights. This was despite the fact that independent valuers have pegged the liquidation value of Reliance Capital much higher at around ₹13,000 crore.

Liquidation value

The liquidation values, however, are based on December 2021 financials when Reliance Capital was admitted into the NCLT. Owing to this, there will be a difference in valuation as much has changed since then with respect to the market environment, financial conditions and financials of Reliance Capital.

As such, all bidders are aware of the valuation figures and expectations regarding the bids have been made known to them, so they will have to bid accordingly, an industry source said.

All the four bidders that submitted binding bids under option I will be participating in the e-auction process, including Oaktree Capital, which was reported to be looking to exit the resolution process. The other two bidders were the Hinduja Group and Torrent Investments.

Reliance General

Meanwhile, the CoC will also discuss and take a call on capital infusion in Reliance General Insurance, which has ₹600 crore from the parent company on an “urgent basis” to boost business growth and improve its solvency.

As Reliance Capital is undergoing insolvency proceedings, it has restrictions on allocating capital to subsidiaries and thus the process is expected to take 2-3 months, a person with knowledge of the matter said.

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