NCLT terms second e-auction as violation of bankruptcy rules-GROWMUDRA

NCLT terms second e-auction as violation of bankruptcy rules

02 Feb , 2023 By : Monika Singh

The National Company Law Tribunal (NCLT) on Thursday termed the second e-auction proposed by the administrator of debt-laden Reliance Capital (RCap) as violation of bankruptcy rules.

“The extended challenge mechanism is a violation of Section 30 (1a) of the Corporate Insolvency Resolution Process (CIRP) regulations,” NCLT Mumbai said.

The administrator of debt-laden Reliance Capital (RCap) had proposed to hold the second round of challenge mechanism, which was stayed by the tribunal, to maximise the process from RCap’s bankruptcy process. The lenders of the former Anil Ambani group company were targeting proceeds of more than ?10,000 crore from the insolvency process.

Torrent Investments, a group company through which Gujarat-based Torrent Group had placed its bid for RCap, had earlier moved NCLT terming administrator’s decision to hold another round of challenge process as “illegal”. Torrent had offered an upfront payment of ?8,640 crore and that by Hinduja Group, another bidder, was at ?8,950 crore, including ?8,110 crore as an upfront payment.

Earlier, senior counsel Mukul Rohatgi appearing for Torrent Group, said that the lenders’ plans for fresh auctions were against the tribunal’s orders and there was also no guarantee that the second auction could be the last.

Earlier on Wednesday, the bankruptcy court granted a 45 days extension for completion of RCap’s insolvency process, against the 90 days sought by the administrator, as the present deadline ended on January 31. The new deadline to complete the process now would be March 17.

The bankruptcy proceedings of RCap were to end on June 4, 2022, but were extended to September 2, 2022, following the tribunal’s order. It was further extended to November 1, 2022, and later to January 31, 2023.

Earlier this month, RCap’s filed an application with NCLT seeking a 90 days extension as the present deadline was “too short” considering the ongoing litigations involving the committee of creditors (CoC), resolution applicants and the administrator.