Reliance Capital lenders say they stare at R5,000 crore if another auction not allowed
The lenders in their latest submission to the appellate tribunal have argued that continued stay on extended challenge mechanism will cause irreparable harm to the lenders.
Published: 27th February 2023 07:15 AM | Last Updated: 27th February 2023 07:15 AM | A+A A-
For representational purpose
NEW DELHI: The lenders of Reliance Capital (Rcap) have said that sale of the corporate debtor to Torrent Investments without another round of auction would result in a loss of R5,000 crore to the banks.
In a submission made to the National Company Appellate Tribunal (NCLAT), the banks and financial institutions have pleaded that RCap owed over R25,000 crore to lenders, most of which is public money. They have said that R13,500 crore of admitted claims belong to LIC, EPFO, provident and pension funds, and Army group insurance fund.
The NCLT has restrained the Committee of Creditors from conducting another round of auction after Torrent Investments had filed a plea on January 9, requesting the tribunal to quash the lenders’ plan to hold a fresh auction for the takeover of RCap. Lenders have moved NCLAT against the stay order of NCLT. Torrent Investments emerged as the highest bidder in the e-auction on 21 December 2022 with a bid price of R8,640 crore.
The lenders in their latest submission to the appellate tribunal have argued that continued stay on extended challenge mechanism will cause irreparable harm to the lenders. It has already resulted in an interest loss of over R275 crore in the last six weeks, with further loss of R45 crore per week.
The lenders have further argued in their submission to NCLAT that the stay on extended challenge mechanism has prevented the Committee of Creditors (CoC) from discovering higher value, and has put the resolution process in suspended animation.
The lenders have also argued that there is no limitation on the number of methods of challenge mechanisms adopted. “The RFRP (Request for resolution plan) sufficiently supports the power of the COC to hold multiple challenge mechanisms,” they say in their submission.
The lenders have also alleged that Torrent Investment misused the exparte order of NCLT dated 3 January to rewrite its own resolution plan. On 6 January, the company revised the upfront payment from R3,750 crore to R8,640 crore, while deliberately not making CoC a party in the NCLT.
NCLT restrained Committee of Creditors
The NCLT has restrained the Committee of Creditors from conducting another round of auction after Torrent Investments had filed a plea requesting the tribunal to quash the plan to hold a fresh auction.
