After the National Company Law Appellate Tribunal (NCLAT) last week allowed the lenders of Reliance Capital to go ahead with the extended challenge mechanism, the committee of creditors (CoC) has proposed holding the auction on March 20.

“In continuation and as part of the Challenge Mechanism, the CoC proposes to conduct an Extended Challenge Mechanism amongst RAs (resolution applicants) on March 20, (Monday) for value enhancement,” the CoC said in a notice accessed by businessline.

The threshold bid amount for participating in the extended challenge mechanism has been set at ₹9,500 crore on an NPV (net present value) basis. Following the first round, the threshold will increase by ₹500 crore for the second round to ₹10,000 crore and by ₹250 crore for the third round to ₹10,250 crore. The threshold bid will further increase by another ₹250 crore for every subsequent round undertaken.

The minimum upfront cash component for bidding under the extended challenge mechanism and Round 1 has been set at ₹8,000 crore.

“Any revised Financial Proposal submitted by the RAs irrespective of the TBA (threshold bid amount) of the round shall comply with this requirement of minimum ₹8,000 crore of upfront cash,” the notice said. 

It added that determination of the NPV by CoC will be final and binding on the resolution applicants.

The NCLAT had, on March 2, set aside the February 2 order of the Mumbai bench of the NCLT, thus allowing the CoC of Reliance Capital to hold the second challenge mechanism, and to take “any steps for further negotiations with the Resolution Applicants”.

A two-member Bench had held that the CoC “is fully empowered” to further negotiate with one or more resolution applicants, even after completion of challenge mechanism on December 21.