NCLT gives interim relief to Torrent, puts Hinduja's RCap offer on hold

The highest bidder for Reliance Capital, Torrent group, received an interim relief from the National Company Law Tribunal (NCLT) Mumbai bench, which asked the lenders to keep Hinduja group’s post-auction offer in abeyance till the next hearing.

The Torrent, which offered Rs 8,640 crore for Reliance Capital, had asked the lenders not to entertain Hinduja’s post-auction offer of Rs 9,000 crore as accepting late offers would defeat the entire challenge process. At the hearing on Tuesday, the counsel for the CoC informed the bench that no final decision had been taken by the CoC as all the offers are under process for legal due diligence. The counsel for the CoC sought one week’s time to move the National Company Law Appellate Tribunal. The Hinduja group was not represented in the court. The counsel for the administrator said the entire bidding process is run transparently with the aim of value maximisation for lenders. The next hearing is scheduled on January 12.

During the auction, Hinduja made an offer of Rs 8,110 crore, but raised it to Rs 9,000 crore and offered 100 per cent upfront cash to the lenders.

The CoC meeting, held on Tuesday, remained inconclusive due to the ongoing litigation. In the meeting, financial advisors — Deloitte, and KPMG — observed that the upfront cash payment to the lenders by Torrent was Rs 3,750 crore, as against Hinduja’s offer of Rs 9,000 crore upfront. Torrent has also proposed deferred payment of 3-5 years and without Torrent Investment’s corporate guarantee offered in the first round and at zero interest.

Lenders usually prefer to give higher weightage during voting for upfront cash so as to free their capital earlier.

Reliance Capital was sent to the NCLT court in November 2021 after it defaulted to its debt worth Rs 24,000 crore.

Torrent also wants the CoC to allow it a charge on the Reliance Capital assets for deferred financing.

The CoC decided to file an extension application with NCLT to extend the resolution process completion timeline to February 15.

Valuation reports by Duff & Phelps and RBSA Advisors pegged the liquidation value of Reliance Capital at Rs 12,500 crore and Rs 13,200 crore, respectively. The liquidation value of Reliance Capital is still far higher than the value of the bids received from both parties.

According to Duff and Phelps, the liquidation value of Reliance General Insurance alone is worth Rs 7,000 crore, and Reliance Nippon Life Insurance is Rs 4,000 crore. Both insurance companies are the only profit-making company in the portfolio of Reliance Capital assets.

The NCLT has set the last date to complete the resolution process by month-end.