Reliance Capital Committee of Creditor rejects all bids, considering liquidation
Nov 30, 2022, 17:45 IST
The Committee of Creditors (COC) of Reliance Capital (RCAP), in its meeting held on Wednesday, has decided to reject all the binding bids that it received from the bidders on Monday.
The COC is now considering sending Reliance Capital to liquidation, under the newly introduced regulation 6(A) of the IBC, whereby each individual business can be sold separately.
According to sources, the decision to reject the bids had been taken as the lenders are of the opinion that the bid value offered by all the bidders is too low.
For the financial services business, RBI has special powers under section 227 of the IBC to refer companies to insolvency for debt resolution. Reliance Capital was the third financial services company that had been referred by the RBI for insolvency.
The other two are DHFL and SREI.
DHFL was sold to Piramal at 50 per cent of its liquidation value, while SREI's resolution process is still in progress.
The rejection of the Reliance Capital bids proves that the use of section 227 by the RBI has not worked in favour of lenders of the financial services companies.
Notably, Reliance Capital has received 5 bids under option 1 for the Reliance Capital Core Investment Company (CIC), as the deadline to submit binding bids ended on Monday 28 November.
The option 1 bidders are Hinduja, Torrent, Oaktree, Cosmea Financial and Piramal consortium, and UAVRCL. Out of these five bidders, UVARCL has bid on a fee basis, which means that it has not submitted any resolution plan for RCAP. It will further sell RCAP assets and make payments to lenders, as and when the sale happens.
No separate bids were received for Reliance General Insurance Company (RGIC) and Reliance Nippon Life Insurance Company (RNLIC)
The size of Torrent and Oaktree's bids is Rs 4,500 crore and Rs 4,200 crore, respectively.
Out of these four, the Cosmea-Piramal consortium has offered Rs 4,250 crore as the upfront payment, while Hinduja offered Rs 4,100 crore upfront to the lenders.
The upfront payment by Torrent and Oaktree is in the range of Rs 1,000 crore.
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The COC is now considering sending Reliance Capital to liquidation, under the newly introduced regulation 6(A) of the IBC, whereby each individual business can be sold separately.
According to sources, the decision to reject the bids had been taken as the lenders are of the opinion that the bid value offered by all the bidders is too low.
For the financial services business, RBI has special powers under section 227 of the IBC to refer companies to insolvency for debt resolution. Reliance Capital was the third financial services company that had been referred by the RBI for insolvency.
The other two are DHFL and SREI.
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The rejection of the Reliance Capital bids proves that the use of section 227 by the RBI has not worked in favour of lenders of the financial services companies.
Notably, Reliance Capital has received 5 bids under option 1 for the Reliance Capital Core Investment Company (CIC), as the deadline to submit binding bids ended on Monday 28 November.
The option 1 bidders are Hinduja, Torrent, Oaktree, Cosmea Financial and Piramal consortium, and UAVRCL. Out of these five bidders, UVARCL has bid on a fee basis, which means that it has not submitted any resolution plan for RCAP. It will further sell RCAP assets and make payments to lenders, as and when the sale happens.
No separate bids were received for Reliance General Insurance Company (RGIC) and Reliance Nippon Life Insurance Company (RNLIC)
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Cosmea-Piramal has offered Rs 5,231 crore for RCAP, while Hinduja's bid is Rs 5,060 crore. The size of Torrent and Oaktree's bids is Rs 4,500 crore and Rs 4,200 crore, respectively.
Out of these four, the Cosmea-Piramal consortium has offered Rs 4,250 crore as the upfront payment, while Hinduja offered Rs 4,100 crore upfront to the lenders.
The upfront payment by Torrent and Oaktree is in the range of Rs 1,000 crore.
SEE ALSO:
Corporate demand boosts hotel demand in Q3: JLL
Former Flipkart SVP's online shopping platform Flash raises $5.8 million in seed round