RCap insolvency- Torrent moves SC against NCLAT order allowing second e-auction

RCap insolvency: Torrent moves SC against NCLAT order allowing second e-auction

Torrent Group has moved the Supreme Court against the National Company Law Appellate Tribunal’s (NCLAT) order that permitted holding of an extended auction for Reliance Capital, which is undergoing insolvency proceedings.

In its filing, the Gujarat-based firm has termed the administrator’s decision to hold another round of challenge process “illegal”, even as it sought a faster and time-bound conclusion of the bankruptcy process, sources close to the development said.

The apex court is expected to start hearing the matter next week.

The committee of creditors (CoC) of RCap has decided to hold the second round of e-auction, following the NCLAT order, on March 20.

The extended challenge mechanism is being conducted to maximise the value through the insolvency process as the results of the first challenge mechanism, according to the administrator and the CoC, were “suboptimal and unsatisfactory”.

On March 2, overturning a lower court’s order, NCLAT permitted holding a second e-auction as sought by lenders and the administrator in an attempt to maximise value from the insolvency process. The appellate tribunal had also told the CoC to take steps for further negotiations with resolution applicants as per the relevant clauses of the resolution plan.

The order enabled the CoC to negotiate and call for higher bids.

In February, the National Company Law Tribunal’s (NCLT) Mumbai bench had declared the proposed second e-auction a violation of bankruptcy rules. Further, the bankruptcy tribunal had also named Torrent Group the highest bidder under the first challenge mechanism and directed the administrator to take the process to its “logical conclusion”.

In the first round of the challenge mechanism, Torrent had emerged as the highest bidder with a bid amount of Rs 8,640 crore and IIHL came in second with a Rs 8,110-crore bid.

The first round of the auction led to a legal tangle after IIHL made an all-cash bid of Rs 9,000 crore, which was challenged by Torrent before the NCLT’s Mumbai bench. Torrent later revised its bid of Rs 8,640 crore by offering the entire amount in upfront cash against Rs 3,750 crore offered earlier in the auction.