NEW DELHI: Reliance Capital (Rcap) lenders have said that the sale of the corporate debtor to Torrent Investments without another round of auction would result in a loss of R5,000 crore to the banks.
In a filing filed with the National Business Appeals Tribunal (NCLAT), the banks and financial institutions claimed that RCap owed more than Rs 25 000 crore to the lenders, most of which is public money. They have said that Rs13,500 crore of admitted claims belongs to LIC, EPFO, provident and pension funds, and Army group insurance fund.
NCLT has prevented the Creditors' Committee from conducting another round of auction after Torrent Investments entered a guilty plea on January 9, asking the court to strike down the lenders' plan to hold a new auction for the acquisition of RCap. Lenders have moved NCLAT against NCLT's stay order. Torrent Investments emerged as the highest bidder in the electronic auction on December 21, 2022 with a bid price of Rs 8,640 crore.
The lenders in their latest appeals court filing have argued that continued stay in the extended challenge mechanism will cause irreparable harm to the lenders. It has already resulted in an interest loss of over Rs 275 crore in the last six weeks, with an additional loss of Rs 45 crore per week.
The lenders have further argued in their submission to NCLAT that the suspension of the extended challenge mechanism has prevented the Creditors' Committee (CoC) from discovering a higher value and has put the resolution process on suspended animation.
Lenders have also argued that there is no limitation on the number of challenge mechanism methods adopted. โThe RFRP (Request for Resolution Plan) sufficiently supports the power of the COC to hold multiple challenge mechanisms,โ they say in their presentation.
The lenders have also alleged that Torrent Investment abused NCLT's January 3 exparte order to rewrite its own resolution plan. On 6 January, the company revised the initial payment from Rs3,750 crore to Rs8,640 crore, while deliberately not making CoC part of the NCLT.
NCLT Restricted Committee of Creditors
The NCLT has prevented the Creditors' Committee from conducting another auction round after Torrent Investments entered a guilty plea asking the court to strike down the plan to conduct a new auction.
