RCap’s 2nd e-auction set to be delayed – The Financial Express

The Financial Express
The second e-auction of debt-laden Reliance Capital is likely to hit a roadblock with the Hinduja Group seeking to withdraw its enhanced offer and Torrent Group unlikely to participate due to lack of clarity. In case of no interest from bidders, the former Anil Ambani group company would face liquidation, leading to depletion of the value of its assets.
IndusInd International Holdings (IIHL), the firm through which the Hinduja Group had placed bids, has informed lenders of its intention to withdraw its post-auction revised bid of Rs 9,000 crore. The company now wants to retain its earlier offer of Rs 8,110 crore, made at the time of the first auction held on December 21, 2022, sources close to the development said.
This is likely to derail the committee of creditors’ (CoC) plans to conduct the second round with a base price of `9,500 crore as it intended to maximise the recovery from the resolution process.
The CoC also could not come to a conclusive decision on the date for the second round as lenders and bidders cited lack of clarity in its outcome or how a winner could be decided as the Supreme Court is yet to give a final order in the matter. The apex court is slated to hear it in August.
Separately, Cosmea Financial and Piramal Group, which had submitted binding bids in November last year, have written to the administrator seeking a refund of their earnest money deposit (EMD) of `75 crore each as they wish to withdraw from the resolution process.
As a stalemate continues, lenders and bidders have to find a solution at the earliest.
According to bankers, in Friday’s CoC meeting, Torrent had suggested conducting a Swiss Challenge auction with its earlier bid of `8,640 crore as the threshold. If the lenders agree to this, Torrent will have the first right to match any counter offer from IIHL, they said.
RCap’s administrator was not in favour of the Swiss Challenge and suggested a closed envelope bid process, which was rejected by the CoC. Further, according to bankers, both the Swiss Challenge or closed envelope processes would go against the apex court’s direction that permitted conducting of an extended auction.
On March 20, rejecting a petition filed by Torrent Group, the SC refused to stay a National Company Law Appellate Tribunal (NCLAT) order that permitted holding of a second e-auction for the bankrupt firm.
The CoC had initially planned to hold the extended challenge mechanism on March 29, subject to approvals of the administrator and bidders.
The CoC is likely to meet again on Monday to take a call on the issue.
RCap has been in insolvency since November 29, 2021, when RBI superseded its board. The insolvency process has been going on nearly 480 days, much longer than the statutory time limit of 330 days.
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