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The National Company Law Appellate Tribunal (NCLAT) on March 2, 2023 allowed a petition filed by lenders of Reliance Capital, seeking another round of auction for the debt-ridden firm undergoing insolvency proceedings.
A two-member Bench set aside an order passed by NCLT and said the Committee of Creditors (CoC) has the power to negotiate and call for a higher bid. The appellate tribunal permitted the CoC to continue with the challenge mechanism and invite bids after two weeks. The NCLAT order came on a petition filed by Vistra ITCL (India), One of the lenders of Anil Ambani-promoted Reliance Capital, challenging an order of the NCLT that restricted further auction of the bankrupt firm. In the Reliance Capital (RCap) matter, Torrent Investments emerged as the highest bidder with a resolution plan of ₹8,640 crore.
However, the CoC of RCap decided to conduct a second challenge mechanism, and then Hinduja Group firm Indusind International Holdings Ltd. (IIHL) put in a revised bid. This was challenged by Torrent Investments before the Mumbai bench of the NCLT (National Company Law Tribunal). The NCLT had said on February 2 that the challenge mechanism for financial bids stood concluded as of December 21, 2022, with the bid of Torrent Investments at ₹8,640 crore being the highest. Torrent Investments had filed a plea on January 9, requesting the tribunal quash the lenders’ plan to hold a fresh auction for the takeover of RCap. Later, IIHL also filed a petition challenging the NCLT order. Torrent Investments was the highest bidder, offering ₹8,640 crore in the last round of the “challenge mechanism”. IIHL has also challenged the NCLT order before the appellate tribunal. RCap has a consolidated debt of about ₹40,000 crore.
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