RCap lenders entitled to negotiate with bidders, rules NCLAT
New Delhi, March 2
The National Company Law Appellate Tribunal (NCLAT) on Thursday allowed lenders of Reliance Capital to hold an extended challenge mechanism or second round of auction for the sale of the debt-ridden financial services company.
Extended challenge mechanism
- The NCLAT also overturned an order of the NCLT which had declared the extended challenge round illegal
- On February 2, NCLT said the challenge mechanism for financial bids stood concluded as on December 21, 2022, with the bid of Torrent Investments at Rs 8,640 crore being the highest
- However, the lenders which had decided to go for an extended challenge mechanism, petitioned against the order before NCLAT
The NCLAT Bench also said lenders of Reliance Capital had the power to negotiate and call for a higher bid. It overturned an order of the NCLT which had declared the extended challenge round illegal.
NCLAT ruled that the Committee of Creditors (CoC) can renegotiate the bid amount or call for another round of auction in its “commercial wisdom”.
NCLT in its order had said after concluding the challenge mechanism, no negotiation or value maximisation exercise can be individually undertaken by the CoC.
