NCLAT Grants Petition by Reliance Capital Lenders for Another Round of Auction
Reliance Capital, the debt-ridden firm undergoing insolvency proceedings, may have another chance to find a buyer as the National Company Law Appellate Tribunal (NCLAT) has allowed a petition filed by its lenders seeking a second round of auction. The two-member bench overturned a previous order by the National Company Law Tribunal (NCLT) and ruled that the Committee of Creditors (CoC) has the authority to negotiate and call for a higher bid. The CoC is now free to continue with the challenge mechanism and solicit bids after a two-week period.
The NCLAT’s decision comes after a petition filed by Vistra ITCL (India), one of the lenders of Anil Ambani-promoted Reliance Capital, disputing an NCLT order that barred further auction of the bankrupt firm. The highest bidder for the Reliance Capital (RCap) resolution plan was Torrent Investments, offering Rs 8,640 crore. However, the CoC decided to conduct a second challenge mechanism, and Indusind International Holdings Ltd (IIHL) of the Hinduja Group offered a revised bid.
Torrent Investments contested this and challenged the decision before the Mumbai bench of the NCLT. The NCLT ruled on February 2 that the challenge mechanism for financial bids was concluded on December 21, 2022, with Torrent Investments’ bid being the highest. Torrent Investments filed a plea on January 9 to stop lenders from holding a fresh auction for RCap’s takeover, and IIHL subsequently filed a petition challenging the NCLT’s order.
RCap’s consolidated debt amounts to approximately Rs 40,000 crore. IIHL has also contested the NCLT’s decision before the appellate tribunal. The latest ruling by the NCLAT may offer a glimmer of hope for RCap and its lenders, who are eager to find a buyer and move forward with the insolvency proceedings.
About Reliance Capital:
Reliance Capital Limited is primarily a holding company, holding investments in its subsidiaries, associates, and other group companies. The co’s subsidiaries and associates are engaged in a wide array of businesses in the financial service sector.
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