Ahead of the second round of auctions scheduled for April 26, lenders at Reliance Capital (RCap) will meet on Monday to resolve concerns raised by bidders, the sources said.
Both potential bidders, Torrent Investment and Hinduja Group's IndusInd International Holdings Ltd (IIHL), have expressed multiple reservations about the proposed auction and its terms and conditions.
According to the sources, both bidders have made it clear to the Committee of Creditors (CoC) that unless the issues raised by them are duly resolved to their satisfaction, they are unlikely to participate in the second round of the auction.
The COC is likely to meet again on Monday to address bidders' concerns.
Both bidders want firmness, certainty, transparency, no negotiation on value or on terms and conditions, after the second round of auction ends, they said.
Reliance Capital's two largest lenders, the Employees Provident Fund Organization (EPFO) and LIC, are against making such an up-front commitment.
Both want to keep the space open for further negotiations in case the value of the final bid in the second round of the auction falls below the liquidation value of Rs 13 billion, the sources said.
EPFO and LIC collectively hold more than 30 percent of the voting rights in the COC.
IIHL has also requested that bidders participating in the auction agree not to submit a bid outside of the Challenge Mechanism process. Similarly, the bidders also want the CoC to commit to not considering any bids outside of the Challenge Mechanism.
Both Torrent and the IIHL have taken a strong position on the matter, the sources said, adding that they wanted the process to comply with the Insolvency and Bankruptcy Code (IBC), and that the number of bidders must be notified 24 hours before the auction scheduled for Wednesday.
Torrent has asked to declare after each round how many bidders participate in the next round and the value of their bids, the sources said.
CoC has set a minimum bid amount of Rs 9,500 crore for the first round and Rs 10,000 crore for the second round, with an additional Rs 250 crore for subsequent rounds. The CoC has also made it a condition that all bids must have a minimum of Rs 8,000 crore cash payment up front, the sources said.
Meanwhile, the Mumbai bank of the National Company Law Tribunal (NCLT) has extended the deadline to complete the RCap resolution process by three months to July 16.
