NCLT blocks Hinduja’s belated offer for Reliance Capital

MUMBAI: The National Company Law Tribunal (NCLT) has restrained the administrator of Reliance Capital (RCap) from presenting to the committee of creditors a belated resolution plan submitted by the Hinduja Group for the bankrupt finance company. The committee of creditors was to meet on Tuesday to finalise the winning bidder. The tribunal’s order was in response to a petition by the Torrent Group, which had submitted the highest bid in the challenger round for the sale of RCap under the bankruptcy process. A day after Torrent submitted its bid for Rs 8,640 crore, the Hinduja Group said it would better the offer and pay Rs 9,400 crore. Hinduja’s improved offer came after the auction was over but before the committee of creditors finalised the winner.

The division bench of the NCLT has fixed January 12 as the next date for the hearing. The administrator for RCap, Nageswara Rao Y, is likely to appeal the order in the National Company Law Appellate Tribunal. Given the delay, the company’s resolution will likely go beyond January 31, the revised deadline. Under insolvency law, the timeline for the resolution is six months from the date of admission. The lenders to RCap have already extended the timeline three times. Earlier, lenders had extended the deadline to October 30. Then the lenders gave a second extension, up to November 2021, after some of the bidders sought more time. And creditors allowed a third extension up to January 2023.

Unlike other resolution cases, banks are not the primary financial creditors in the RCap insolvency. The largest chunk of the debt is held with Life Insurance Corporation (LIC) and the Employ-ees’ Provident Fund Organisation, which had invested in the company’s bonds. LIC had earlier sought bids for selling the bonds to asset reconstruction companies. However, last month the corporation decided against selling the RCap debt and chose to wait for the resolution.

While the bids for RCap have improved with every successive auction, the highest offer so far, which the Hindujas have provided, is still 25% below the liquidation value. But industry sources say that lenders will not find it easy to sell the assets individually as RCap has pledged its holding in the general insurance company, which is the most valuable among all its businesses.

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