New Delhi, Jan 8 (PTI) The battle between Torrent and Hinduja Group over the acquisition of debt-ridden Reliance Capital may take a new turn as lenders are considering a second round of 'Challenge Mechanism' or electronic auction for bidders. the sources said.
The Committee of Creditors (CoC) will meet on Monday to decide on the second round of the auction, as it expects bids of more than Rs 10,000 crore from it.
The first round of the auction saw Hindujas and Torrent try to outdo each other by continually upping their bids and offering more cash up front, even after the auction ended, the sources said.
The second round of the Challenge Mechanism under the Insolvency and Bankruptcy Code (IBC) will take place with a reserve price of Rs 9,500 crore, compared to the minimum threshold value of Rs 6,500 crore in the first round. round that concluded on December 21, 2022, according to the sources.
The second round of the Challenge Mechanism is also likely to have a minimum up-front cash payment threshold of around Rs 8000 crore for bidders, they said, adding that this will give Torrent a Rs 640 crore advantage, as the company has already made a cash offer of Rs 8,640 crore.
According to sources, the decision to run a second round of the Challenge Mechanism was made because the commercial viability of the Torrent and Hinduja offerings is not acceptable to the CoC.
Bids by Torrent Group (Rs 8,640 crore) and Hinduja Group's IndusInd International Holdings Ltd. (IIHL) (Rs 8,110 crore) are well below the liquidation value and fair value set by independent appraisers, the companies said. sources.
The liquidation value of Reliance Capital is set at around Rs 13 billion and the fair value is Rs 17 billion. The new round of the Challenge Mechanism is likely to take place around January 20, 2023. The current deadline to complete Reliance Capital's resolution process is January 31, 2023.
On November 29, 2021, the Reserve Bank of India (RBI) replaced the RCL board in view of payment defaults and severe governance issues.
The RBI appointed Nageswara Rao Y as administrator in connection with the company's Corporate Insolvency Resolution Process (CIRP).
Reliance Capital is the third large non-bank financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).
Subsequently, the RBI filed an application for initiation of CIRP against the company in Mumbai court of the National Company Law Tribunal (NCLT). In February last year, the RBI-appointed trustee had invited expressions of interest for the sale of Reliance Capital.
(This story has not been edited by Devdiscourse staff and is automatically generated from a syndicated feed.)
