In an e-auction conducted under the Challenge Mechanism, Torrent had presented a resolution plan for Reliance Capital Ltd (RCL) with a net present value of Rs 8,640 crore, while Hinduja’s offer was Rs 8,110 crore
After the e-auction was over, sources said, Hinduja presented a revised resolution plan with a bid of Rs 9,000 crore and it offered 100 per cent cash upfront
As per an order of the National Company Law Tribunal (NCLT), lenders have to complete the resolution process of Reliance Capital by January 31, 2023
New Delhi;
The Committee of Creditors (CoC) of debt-ridden Reliance Capital Ltd is scheduled to meet on Tuesday to discuss bids submitted by Torrent Group and Hinduja Group as part of the insolvency resolution process.
Earlier, Ahmedabad-based Torrent Group submitted a bid of Rs 8,640 crore for acquiring the NBFC firm set up by the Anil Ambani Group.
If successful, it will mark the entry of Torrent Group into financial services space.
In an e-auction conducted under the Challenge Mechanism, Torrent had presented a resolution plan for Reliance Capital Ltd (RCL) with a net present value of Rs 8,640 crore, while Hinduja’s offer was Rs 8,110 crore.
The CoC fixed a floor value of Rs 6,500 crore for the auction held on December 21.
After the e-auction was over, sources said, Hinduja presented a revised resolution plan with a bid of Rs 9,000 crore and it offered 100 per cent cash upfront.
On the other hand, sources said, Torrent Group offered only Rs 3,750 crore as upfront cash, which is 54 per cent lower than the Hinduja offer.
Meanwhile, Torrent Investments has escalated the legal war for Reliance Capital bid to the Reserve Bank of India (RBI) asking it to issue directions to the administrator.
In a new letter to RBI Deputy Governor M. Rajeshwar Rao dated December 28, Torrent Investments sought directions to Nageswara Rao Y, the administrator of Reliance Capital.
The letter said that the challenge process was concluded on December 21 with the administrator’s email to Torrent Investments confirming its NPV bid amount of Rs 8640 crore as the highest bid amount.
However, Torrent Investments was made aware that a competing resolution applicant Hinduja Group had belatedly submitted a revised financial proposal on December 22 after completion of the challenge process on December 21 and after having learnt that Torrent Investments had emerged as the highest bidder.
The objective of the IBC Code is to maximise value for creditors. As such, the Hinduja bid is best for execution compared to Torrent as it has no requirement of sharing security as the CoC will be concerned with any dilution of current security.
In repeated Supreme Court judgements, it has been held that maximisation of value is a key factor in any plan approval by CoC.
Among 20 companies, Reliance Capital has a wholly owned subsidiary- Reliance General Insurance, and has 51 per cent stake in Reliance Nippon Life Insurance.
As per an order of the National Company Law Tribunal (NCLT), lenders have to complete the resolution process of Reliance Capital by January 31, 2023.
This is the first time that an e-auction of this scale is taking place for the resolution of an NBFC (non-banking financial company) under the Insolvency and Bankruptcy Code (IBC).
The decision of e-auction was taken at the behest of LIC and EPFO, which together control 35 per cent of the voting rights in the CoC.
The National Company Law Tribunal (NCLT) has set a deadline of March 31, 2023 for the completion of RCL’s resolution, which is already delayed by over a year.
The Reserve Bank of India (RBI) had on November 29 last year superseded the board of RCL in view of payment defaults and serious governance issues.
The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.
RCL is the third large NBFC against which the central bank has initiated bankruptcy proceedings under IBC.
The other two were Srei Group NBFC and Dewan Housing Finance Corporation.The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of NCLT.
In February this year, the RBI-appointed administrator invited expression of interest for the sale of RCL.