NEW DELHI: As bids for Reliance Capital, which is undergoing corporate insolvency resolution process (CIRP), have been much lower than the liquidation value of Rs 13,000 crore, a major difference of opinion has cropped up between the lenders and the Reliance Cap administrator. While the committee of creditors (CoC) wants to proceed with the ongoing process and bring finality to the resolution process by awarding the company to the highest bidder, administrator Y Nageshwar Rao wants the company to go into liquidation.
Sources told this newspaper administrator’s advisor Deloitte is of the opinion that the value of the bids is so low (60-70% below the liquidation value) that RCap should go for liquidation. RCap has received 4 binding bids on November 28, which was the last date for submitting the bids. The highest bid of Rs 5,231 crore has been submitted by a consortium of Cosmea Financial and Piramal. Hindujas with Rs 5,060 crore has emerged as the second highest bidder, followed by Torrent Investment (Rs 4,500 crore) and Oaktree (Rs 4,200 crore). Valuation reports by independent valuer Duff & Phelps has pegged the liquidation value of RCap at Rs 12,500 crore while RBSA has valued the company’s assets at Rs 13,200 crore.
Sources said Life Insurance Corporation of India (LIC) and EPFO, who collectively control 35% of voting rights in the CoC, hold the key to resolving the differences. LIC has total claims of Rs 3,400 crore while EPFO has claims of Rs 2,500 crore. The decision by LIC and EPFO will play a pivotal role in deciding final resolution process. They have to decide whether they want the resolution or liquidation and what option they want to choose in case they wish to go ahead with the resolution process.
Bids value 60-70% lower than estimates
As per sources, Deloitte is of the opinion the value of the bids is so low (60-70% below liquidation value) that RCap should go for liquidation. RCap has received 4 bids on Nov 28, which was the last date for submitting the bids