Torrent Elevates Bid War Against Hinduja Group For Reliance Capital To RBI
Torrent Investments has taken the legal dispute regarding their bid for Reliance Capital to the Reserve Bank of India (RBI) and have requested the RBI to issue instructions to the administrator.
The Committee of Creditors will be meeting on 03 January to assess the latest development in the case.
On December 28, Torrent Investments wrote to RBI Deputy Governor M. Rajeshwar Rao requesting directions regarding Nageswara Rao Y, the manager of Reliance Capital.
According to the letter, the competition came to a close on December 21 with administrator's email to Torrent Investments confirming its NPV bid amount of Rs 8640 crore as the highest bid amount.
However, Torrent Investments was informed that Hinduja Group, a rival resolution applicant, had tardily submitted a revised financial proposal on December 22 following the conclusion of the challenge procedure on December 21 and after learning that Torrent Investments had won the auction. According to earlier media reports, Hinduja's offer of Rs 9,000 crore in cash upfront defeats Torrent's offer of only Rs 4,000 crore in cash, with the remaining amount to be paid to lenders in three equal installments over the course of years 3/4/5 at a zero interest rate.
Maximising value for creditors is the goal of the IBC Code. Given that the CoC will be concerned with any degradation of current security, the Hinduja offer is therefore preferable for execution compared to Torrent because it has no demand for sharing security.
In repeated Supreme Court judgments, it has been held that maximisation of value is a crucial consideration in the CoC's approval of any plan.
Only DHFL, which was won by Piramal Group, was resolved on behalf of a financial services company under the special authority of RBI Section 227.
In this situation, CoC admitted Adani Group—which was not even a resolution applicant—because it provided the highest value for the Piramal proposal.
