The committee of creditors (CoC) of Reliance Capital (RCap) will hold the second round of e-auction, following approvals from the National Company Law Appellate Tribunal (NCLAT), on March 20.
The extended challenge mechanism is being conducted to maximise the value through the insolvency process, as the results of the first challenge mechanism was “sub-optimal and unsatisfactory”.
Under the second e-auction, the minimum threshold for bidders has been pegged at ₹9,500 crore, against ₹6,500 crore in the first challenge mechanism that had concluded on December 21. The threshold for the second round of the extended challenge mechanism is ₹10,000 crore, and from the third round onwards, bidders have to increase it by ₹250 crore each, sources close to the development said.
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The CoC was expecting to garner more than ₹10,000 crore from the extended challenge mechanism, sources said, adding, participants whose bids were earlier rejected by the CoC including Cosmea Financial, Piramal Group and Oaktree Capital would also be eligible to take part. This is based on the earnest money deposits they made at the time of submitting applications.
The decision to conduct the extended challenge mechanism (second e-auction) was taken after the NCLAT ruled in favour of the lenders and allowed them to hold the second e-auction to maximise the value from the sale of assets.
In the first round, Gujarat-based Torrent Group had emerged as the highest bidder with a bid amount of ₹8,640 crore and IndusInd International Holdings Ltd (IIHL), the firm through which the Hinduja Group had placed bids, came in as the second-highest with a ₹8,110-crore bid.
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The first round of the auction had run into a legal tangle after IIHL made an all-cash bid of ₹9,000 crore, which was challenged by Torrent before the Mumbai bench of the National Company Law Tribunal (NCLT). Torrent later revised its bid of ₹8,640 crore by offering the entire amount as upfront cash, against ₹3,750 crore offered earlier in the auction.
On March 2, the appellate tribunal overturned a lower court’s order and permitted holding a second e-auction, a move that would further delay the insolvency proceedings of the former Anil Ambani group firm.
