Lenders to meet on Tuesday to discuss bids for Reliance Capital acquisition

The Committee of Creditors (CoC) of debt-ridden Reliance Capital Ltd is scheduled to meet on Tuesday to discuss bids submitted by Torrent Group and Hinduja Group as part of the insolvency resolution process.

Ahmedabad-based Torrent Group submitted a bid of Rs 8,640 crore for acquiring the NBFC firm set up by the Anil Ambani Group, sources said.

If successful, it will mark the entry of Torrent Group into financial services space.

In an e-auction conducted under the Challenge Mechanism, Torrent had presented a resolution plan for Reliance Capital Ltd (RCL) with a net present value of Rs 8,640 crore, while Hinduja's offer was Rs 8,110 crore.

The CoC fixed a floor value of Rs 6,500 crore for the auction held on December 21.

After the e-auction was over, sources said, Hinduja presented a revised resolution plan with a bid of Rs 9,000 crore and it offered 100 per cent cash upfront.

On the other hand, sources said, Torrent Group offered only Rs 3,750 crore as upfront cash, which is 54 per cent lower than the Hinduja offer.

This is the first time that an e-auction of this scale is taking place for the resolution of an NBFC (non-banking financial company) under the Insolvency and Bankruptcy Code (IBC).

The decision of e-auction was taken at the behest of LIC and EPFO, which together control 35 per cent of the voting rights in the CoC.

The National Company Law Tribunal (NCLT) has set a deadline of March 31, 2023 for the completion of RCL's resolution, which is already delayed by over a year.

The Reserve Bank of India (RBI) had on November 29 last year superseded the board of RCL in view of payment defaults and serious governance issues.

The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.

RCL is the third large NBFC against which the central bank has initiated bankruptcy proceedings under IBC.

The other two were Srei Group NBFC and Dewan Housing Finance Corporation.The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of NCLT.

In February this year, the RBI-appointed administrator invited expression of interest for the sale of RCL.