NCLAT Allows Reliance Capital Lenders Plea For Second Round Of Auction

A two-member bench of The National Company Law Appellate Tribunal (NCLAT) on Thursday set aside an order of NCLT and allowed the plea filed by Reliance Capital lenders which sought another round of bidding for the debt-ridden firm. The bench observed that Committee of Creditor (CoC) is vested with the power to negotiate and call for a higher bid.

In the previous hearing, the NCLAT concluded its hearing on the plea filed by lenders of Reliance Capital seeking second round of financial bids for the debt-ridden firm. The firm is currently going through the insolvency resolution process. 

Previously, Senior Advocate Mukul Rohatgi represented Torrent Investments and concluded his arguments. He submitted that the Insolvency and Bankruptcy Code (IBC) provides for the maximisation of the value, but the focus has to be on the revival of the assets. He further stated that IBC is not a debt recovery platform and the committee of the creditors should look beyond their individual recovery. He remarked that the focus should be on viability and feasibility.

In the last hearing senior advocate Kapil Sibal, representing the lenders submitted that the objective of IBC is to maximise the value of the assets and liberty is given to the committee of creditors to negotiate the terms.

NCLAT was hearing a petition filed by Vistra ITCL (India) who is one of the lenders of Anil-Ambani-promoted Reliance Capital. The petition challenged the order of NCLT which restricted further auction of the bankruptcy firm.

On 2 February, the Mumbai Bench of the NCLT said that the challenge mechanism for financial bids were concluded on 21 December, 2022 with the bid of Torrent Investments. The bid of Torrent Investments was the highest at Rs 8,640 crore.

A petition was filed by Torrent Investments on 9 January requesting the tribunal to quash the plea of the lenders’ plan to hold a fresh auction for the takeover of Reliance Capital. Eventually, the Hinduja Group also filed a plea challenging the NCLT Order.

The Reliance Capital has a consolidated debt of about Rs.40,000 crore.

(With Inputs From Agencies)