Reliance Capital CIRP likely to get delayed further; auction may get deferred by a week
The lenders of Reliance Capital are considering an extension of deadline for completion of resolution process till 30 May 2023. The current deadline ends on 16 April.
Considering the fact that the second round of auction is yet to take place, it is not possible to wrap up the resolution process within the current deadline. The deadline to complete the resolution process of Reliance Capital has been extended multiple times in the past.
On the other hand, all the three bidders — Torrent, IIHL, and Oaktree — who will be participating in the extended Challenge Mechanism (second round of auction), are still engaged with the Committee of Creditors on certain issues or concerns raised by them.
The major concern area of the bidders is compliance of resolution plans as per the IBC and RFRP (Request for Resolution Plan) guidelines, as in the first round of auction the lenders had alleged that the resolution plans submitted by the bidders after the auction were non-compliant. Therefore, this time bidders want compliance of resolution plans as per the IBC and RFRP guidelines, before going in for the second round of auction.
Bidders are also seeking more transparency from the CoC in the extended Challenge Mechanism and have demanded that a separate e-portal be created on the extended Challenge Mechanism.
Sources have indicated that the second round of auction, scheduled for 11 April, is likely to be postponed by another one week, till all the issues raised by the bidders are resolved to their satisfaction.
The second round of auction for Reliance Capital has been postponed thrice in the past due to litigation.
It must be noted that earlier all the bidders had shown reluctance to go ahead with the second round of auctions. Torrent Investments had conveyed to the lenders that the company was not willing to participate in the second round of auction, and IIHL of Hinduja Group has also told the lenders that it wanted to withdraw its post auction revised bid of Rs 9,000 crores and retain the old offer of Rs 8110 crores made in the first auction held on 21 December.
The first round of auction was held on 21 December 2022. The first round of auction has witnessed both, Hindujas and Torrent, trying to outbid each other by continuously sweetening their bids and offering more upfront cash, even after the auction got over.
However, Torrent’s all cash bid of Rs. 8640 crores and IIHL bid of Rs. 8110 crores were far below the liquidation value and fair value fixed by the independent valuers. The Liquidation Value of Reliance Capital is pegged at around Rs 13,000 crores and Fair Value is Rs 17,000 crores.
Also See: Auction for Reliance Capital now on 11 April; Torrent, Hinduja, Oaktree in fray
