No Deviation In Inviting 'challenge Mechanism', RCap Lender To NCLAT

Lenders of Reliance Capital on Friday submitted before the insolvency appellate tribunal NCLAT that there was no deviation from procedures in the 'challenge mechanism' adopted by them for the resolution of Reliance Capital case.

The efforts were towards maximisation of assets and it is for the lenders to decide the value, submitted senior advocate Kapil Sibal representing Vistra ITCL (India) Ltd, one of the lenders of Reliance Capital.

The adjudicating authority (NCLT) can not restrain the Committee of Creditors (CoC) from exercising their commercial wisdom, he said.

"Ultimately we (CoC) have to decide the value," Sibal said, adding in this case, lenders decided not to cancel the bid after finding it suboptimal but to go for the "challenge mechanism".

Sibal further submitted that the National Company Law Tribunal (NCLT) can not decide the value.

Hinduja group firm Indusind International Holdings Ltd (IIHL) has also approached the National Company Law Appellate Tribunal (NCLAT), supporting the lenders.

The appellate tribunal listed the matter on Monday for further hearing after Vistra ITCL concluded its argument. Now the administrator of RCap, IIHL and others respondents would start their argument.

In its petition, IIHL said it sees no bar in multiple rounds of 'challenge mechanism', to discover the highest value.

IIHL's appeal was heard by NCLAT along with the plea of lenders.

It submitted that the Adjudicating Authority (NCLT) has committed a grave "jurisdictional error" in entertaining an application which seeks to interdict an ongoing Resolution Process being carried out by CoC at the behest of a resolution applicant (Torrent)."

IIHL further said NCLT has usurped the powers of CoC.

"The Adjudicating Authority (NCLT) has sought to effectively step in the shoes of CoC and take over the decision-making process and interfere with the exercise of commercial wisdom of CoC," it said.

It has committed a grave error of jurisdiction in interfering with the commercial decision of CoC which has found the offers/resolution plans as sub-optimal.

"The Impugned Order halts the CoC's decision to continue with the Challenge Mechanism with a threshold value of Rs 9,500 crore," it said.

The Mumbai bench of NCLT on February 2, ruled against holding a fresh round of auction for the takeover of Anil Ambani-promoted Reliance Capital and said the challenge mechanism for financial bids has already concluded.

NCLT had allowed Torrent Investments' application and declared that the challenge mechanism for financial bids stood concluded as on December 21, 2022, with the bid of the applicant at Rs 8,640 crore being the highest.

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.

Torrent Investment was the highest bidder offering Rs 8,640 crore in the last round of the 'challenge mechanism'.

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

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