Reliance Capital Insolvency: NCLT Orders Status Quo In Torrent Dispute
"Extended auctions" of Reliance Capital further stalled, as Committee of Creditors objects to interim relief.
The insolvency court has asked parties to maintain "status quo" in the Reliance Capital insolvency case until all the objections to the "extended auctions" posed by Torrent Investments Ltd. are completely resolved. This requires a rescheduling of the next phase of auctions to be held on Jan. 23.
Torrent Investments, the highest bidder in the Reliance Capital Ltd. auctions, had approached the insolvency court earlier this month to prevent the Committee of Creditors of Reliance Capital from considering a revised bid submitted by the Hinduja Group.
The revision is in violation of the insolvency code and must not be considered, according to Torrent. However, the Committee of Creditors submitted that it had every right to negotiate or renegotiate the proposals to maximize the value of its assets.
The court, after taking into consideration the objections, had granted an interim relief to Torrent on Jan. 3 by preventing the administrator from placing any non-compliant bids before the CoC.
Unable to consider revised bids, the Committee of Creditors unanimously decided to hold an extended round of auctions, which was expected to be held on Jan. 19. However, considering the pending dispute, it had rescheduled the auctions to Jan. 23.
This is in light of the fact that objections were also raised against the fresh round of auction. According to Torrent, a fresh round of auction is intended at aiding Hinduja to revise its bid and is illegal as the administrator has already called for the conclusion of the challenge mechanism in December.
In the last hearing, the CoC had informed the court of its inability to further stall the process, and had requested to allow it to go ahead with the auction.
On Friday, Kapil Sibal, representing the Committee of Creditors, submitted a written submission presenting several reasons why interim relief should not be granted in the case.
According to him, the NCLT has no jurisdiction to entertain this application at this stage as the CoC, in its commercial wisdom, has already decided that all the bids are suboptimal.
The delay will result in other eligible resolution applicants walking away from the process and can cause irreparable damage to the resolution of the company, he said.
Objections against the grant of interim relief shall be heard on Monday.