Indian lenders have asked bidders for bankrupt Reliance Capital to offer Rs 8,000 crore in minimum upfront cash in the second auction starting on March 20.
At the same time, lenders have set a minimum bid amount of Rs 9,500 crore for the first round of the auction and Rs 10,000 crore for the second, with an additional Rs 250 crore for subsequent rounds.
Ahmedabad-based Torrent Group and the Hinduja conglomerate are in the race to buy the company.
The auction is being held after the National Company Law Appellate Tribunal (NCLAT) ordered a second auction to get the maximum value for Reliance Capital’s assets.
In the first auction held in December, Torrent Group had emerged the highest bidder with Rs 8,640 crore. But the Hinduja group had offered Rs 9,000 crore after the auction ended.
The lenders then decided to hold the second auction but Torrent objected, saying an auction could not take place on an open-ended basis because it would dissuade genuine buyers.
Torrent moved the National Company Law Tribunal (NCLT) in January this year against the second auction, and there its plea was upheld.
The lenders then appealed to the NCLAT, which ruled in their favour. Torrent is likely to move the Supreme Court against the NCLAT order.
Under the new rules, a bidder is given 30 minutes to bid in each round, which will close if all participating bidders submit their bids before the 30 minutes are over. The administrator, based on instructions from the committee of creditors, will announce the closure of each round, with a 30-minute gap between two rounds.
The bidders will have to submit their financial proposal. Lenders have said all payments to creditors (excluding any equity offered to them) would form part of the net present value (NPV) through upfront cash or deferred payments.
In the event of there being multiple financial proposals from any bidder in any round, the one with the higher NPV will be considered.
Reliance Capital was sent for debt resolution in November 2021 after the company defaulted on loans worth Rs 24,000 crore.
Source: Business Standard, dated 07.03.2023
