Instead, sources said, the lenders recommended a ‘black box’ approach, meaning the modalities of the challenge mechanism would be decided by the CoC, but would be communicated to the bidders only at a later stage.
This also means that the bidders will have to submit their resolution plan amidst complete uncertainty as to how this process will work and will affect the bidding post submission of binding bids.
The ‘Challenge Mechanism’ gives lenders the power to oppose any resolution plan as and when they want.
While some of the bidders have raised concerns with the administrator about the introduction of this new section at this final stage of the bidding process, sources said, there was no mention of this mechanism in the Request for Resolution Plan (RFRP) document.
In the meeting held on Friday, it was decided that all the bidders, while submitting their resolution plan, would have to give written consent that they would agree to implement and participate in the challenge mechanism in any form by the lenders at a later stage. , the sources said.
Last date for submission of binding bids for Reliance Capital Limited ,RCL) and its subsidiaries as of November 28.
RCL had given two options to all the bidders. Under the first option, companies can bid for Reliance Capital Limited, which includes its eight subsidiaries or clusters. The second option gave the bidders the freedom to bid for their subsidiaries individually or in combination.
RCL has eight businesses which are in the block. These include general insurance, life insurance, health insurance, securities business and asset reconstruction, among others.
reserve Bank of India (reserve Bank of India) had superseded the board of RCL on November 29 last year in view of payment defaults and serious governance issues.
The RBI appointed Nageswara Rao Y as the administrator with regard to the Corporate Insolvency Resolution Process (CIRP) of the firm.
Reliance Capital is the third largest non-banking financial company (NBFC) against which the central bank has initiated bankruptcy Proceedings under IBC
the other two were Srei Group NBFCs and Dewan Housing Finance Corporation (DHFL). Later RBI filed an application in Mumbai Bench of NCLT to initiate CIRP against the company.
In February this year, an RBI-appointed administrator had invited expressions of interest for the sale of Reliance Capital.