More Reliance Capital e-auctions are probably coming – 2023

More Reliance Capital e-auctions are probably coming

Debt-laden Reliance Capital (RCap) may face further delays in the second e-auction as lenders express reluctance to guarantee the finality of the insolvency process.

While the second e-auction was originally scheduled for April 26, RCap’s largest lenders, Life Insurance Corporation of India (LIC) and Employees’ Provident Fund Organisation (EPFO), have not agreed that the extended challenge mechanism would be the final one.

More Reliance Capital eauctions
More Reliance Capital eauctions

More Reliance Capital e auctions

Sources close to the development told FE that the Committee of Creditors (CoC) decided to “reserve their rights for further negotiations” in case the auction price is lower than the liquidation value.

With a combined voting rights of 30% in the CoC and combined admitted claims of Rs 8,200 crore, LIC and EPFO are significant players in the insolvency process.

RCap has acknowledged a total of Rs 25,434 crore in claims, but two independent valuers, RBSA and Duff & Phelps, estimate its liquidation value at Rs 13,000 crore. 7JH589H

It remains to be seen how the negotiations will proceed and if they will lead to further delays in the e-auction process.

The beleaguered Reliance Capital (RCap) continues to face roadblocks in its insolvency resolution process as the second e-auction, also known as the extended challenge mechanism, gets delayed once again.

The auction was scheduled to take place on April 26, but sources close to the development indicate that the lenders are unable to guarantee the finality of the process as they want to continue negotiations for value maximization.

This has left the fate of RCap’s resolution process hanging in the balance.

RCap’s largest lenders, LIC and EPFO, who hold a combined voting rights of 30% in the CoC and admitted claims of Rs 8,200 crore, have not agreed to the clause that the second e-auction will be the final one.

This has raised concerns among the bidders who fear that this could lead to subdued interest in the process, or worse, their withdrawal from the auction.

However, the CoC did accept the bidders’ request for the rejection of “toppling bids,” which means that bids outside the e-auction process will not be accepted.

But the CoC’s decision on other demands, such as transparency in the extended challenge mechanism and changes to the terms of ‘force majeure,’ is yet to be ascertained.

Also Read – LIC and Its Plans

This is not the first time that the second e-auction has been delayed, as legal tangles and other issues have caused postponements in the past. The first round of auction was held on December 21, 2022, and the second round has already been postponed twice.

Two bidders, Oaktree Capital and IIHL, have confirmed their participation in the second e-auction, while Torrent Investments, a group company of the Torrent Group, is expected to join in as well.

However, with the uncertainty surrounding the finality of the process, the fate of RCap’s insolvency resolution process remains up in the air.

On April 12, RCap’s CoC received bankruptcy court approval to extend the deadline for completion of the resolution process to July 16, as it was proving difficult to wind up the process within the stipulated timeframe.

The present deadline, which has already been extended multiple times, was set to end on April 16.

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