The second round of auction for acquiring the stressed assets of Reliance Capital will be held today. The debt resolution of this company has gone through twists and turns over the last two years.
In November 2021, the RBI had dragged RCap to the NCLT for commencing insolvency proceedings against the company. As many as 55 entities including YES Bank, Piramal Consortium, Adani Finserve, Brookfield, Bandhan Financial Holdings and Blackstone had initially submitted an expression of interest to acquire the company. Under the initial resolution plan, potential bidders had two options to acquire the assets of RCap. They could either submit a bid for the whole of Reliance Capital under option one or bid for different clusters or subsidiaries under the second option.
Reliance Capital had received six non-binding bids under option 1 — that is for Reliance Capital as a company. Torrent, IndusInd, Oaktree, Cosmea Financial, Authum Investment and B Right Real Estate had submitted bids in the range of ₹4,000 crore to ₹4,500 crore for RCap’s entire assets. However, the lenders were unhappy with the low bids and decided to conduct an e-auction. The committee of creditors (CoC) of Reliance Capital set the base price for bidding via the e-auction process at ₹6,500 crore. Torrent Investment won the e-auction submitting the highest bid of ₹8,640 crore.
It outbid the only other participant, IndusInd International Holdings — part of the Hinduja Group — which submitted a bid of ₹8,110 crore.
The other two entities to submit binding bids, Cosmea Financial and Piramal Capital combined, and US-based Oaktree Capital, did not participate in the e-auction.
Hinduja Group’s revised bid
However, two days later, Hinduja Group submitted a revised bid, offering a net present value of ₹9,000 crore. Torrent filed an appeal with NCLT, claiming that Hinduja’s revised bid should not be considered and that going for a second auction would be illegal and go against the spirit of IBC. The lenders, meanwhile, pressed for a second round of auction
The Mumbai bench of the National Company Law Tribunal (NCLT), however, rejected a request from the committee of creditors (CoC) to hold a second auction for the resolution of Reliance Capital.
Lenders to Reliance Capital, along with the Hindujas, filed a plea in the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT order.
NCLAT set aside the order of the Mumbai bench of the NCLT, thus allowing the committee of creditors of Reliance Capital to hold the second challenge mechanism.