Reliance Capital Insolvency: Administrator To Contest Relief Granted To Torrent
Reliance Capital's winning bidder, Torrent Group, says it fears the administrator will consider Hinduja's illegal resolution plan.
Reliance Capital Ltd.'s administrator intends to appeal against the relief granted to Torrent Investment Pvt. by the National Company Law Tribunal on Monday.
The administrator's counsel, Ravi Kadam, asked the NCLT to stay its order for a week to allow time for an appeal before the National Company Law Appellate Tribunal. The tribunal denied his request.
The situation is an outcome of Torrent Investment's application. Reliance Capital's 'Committee of Creditors' was due to meet on Monday, which prompted Torrent Investment to rush to NCLT for relief. Ahmedabad-based Torrent Investments won with a bid of Rs 8,640 crore to acquire the non-banking financial company set up by the Anil Ambani group. It submitted a resolution plan based on the administrator's request on Dec. 23, noting in its communication that Torrent's was the only plan that the administrator would place before the CoC.
RCap's CoC was due to meet on Monday, which prompted Torrent Investment to rush to NCLT for relief after it noticed media headlines that the Hinduja Group has submitted a revised bid of Rs 9,000 crore.
We wrote to him (the administrator). The media may be wrong; these may be only rumors. Since then, there's been a dead, eloquent silence on the part of our administrator. Our apprehension is that the administrator will take this completely non-compliant plan (of Hinduja Group) to the CoC, which is in the teeth of its mandatory duty not to do so. He (the administrator) can only submit a compliant plan.Darius Khambata, Counsel, Torrent Investments
If the administrator is submitting the Rs 8,110 crore plan of Hinduja Group to the CoC, then "why should he be scared? It's a compliant plan. Only if he's presenting the Rs 9,000 crore plan will he oppose my application," Khambata told the court.
"Procedures and rules can't be abandoned on the mantra of value maximisation. In the long run, it will affect value maximisation because bidding won't be genuine," he added.
Arguing against Torrent's submissions, the administrator's counsel, Ravi Kadam, said that the NCLT cannot interfere in the process at this stage since no decision has been taken by the administrator or the CoC.
The plans are still in the scrutiny stage, where their compliance with various provisions of law is yet to be evaluated. According to Kadam, the evaluation is still a part of the submission process and allows the administrator to seek revisions to the resolution plan to ensure compliance with various laws. Kadam argued that the CoC has the power to further negotiate with bidders to maximise the value of the asset.
Why do you (the NCLT) want to believe that the administrator will not follow the law? If he's advised that Hinduja's (revised) plan is compliant, he can place it before the CoC, which can then be challenged. If he's informed that Hinduja's plan is non-compliant, he will tell the CoC. Then Hinduja can challenge it if it wants. But today, no decision has been taken.Ravi Kadam, Counsel, Reliance Capital's Administrator
Khambata countered, saying, "They (the administrator and the CoC) want the horse to bolt before the NCLT can see anything. The Supreme Court has laid down—follow the procedures strictly; that ensures fairness and value maximisation."
The NCLT saw some merit in Torrent's arguments and directed the administrator not to place the alleged illegal plan of the Hinduja Group before the CoC. The direction may further delay the insolvency process that has to be completed by the end of this month.
The tribunal will hear the matter next on Jan. 12.