RCL resolution plan: Differences emerge between lenders, advisors

New Delhi: Differences have emerged between lenders and process advisors of debt-ridden Reliance Capital over the resolution plan as the Committee of Creditors (CoC) meet on Tuesday to take a final decision.

With the binding bids coming in at an abysmally low value, the advisors and members of the CoC hold different opinions on what process they should adopt for the resolution.

The choice is between liquidation and continuing with the ongoing bid process, sources said. Deloitte, the process advisor of Reliance Capital Ltd (RCL) Administrator Y Nageshwar Rao, is of the opinion that the value of the bids is almost 70 per cent below the liquidation value of Rs 13,000 crore, sources said.

Should Reliance Capital go for liquidation, under section 6(A) of the Insolvency and Bankruptcy Code (IBC), the company would realise close to Rs 13,000 crore. On the other hand, the advisor to the CoC, KPMG, is of the view that they should proceed with the ongoing process and bring finality to the resolution process by awarding the bid to the highest bidder. The difference of opinion is not only between the two process advisors but among the members of the CoC also on the various options for resolution, sources said.

According to sources, a section of the CoC members has recommended a 'close cover option' for the bidding process. Under the process, the award will go to the highest bidder. The other view within the CoC is that in order to maximize the realization, the e-auction process should be adopted, which is a more transparent and fair system for price discovery and is a more preferred and prevalent process in India. According to the sources, the key to resolving the differences lies with the LIC and EPFO, who collectively control 35 per cent of voting rights in the CoC. LIC and EPFO have a debt of Rs 3,400 crore and Rs 2,500 crore, respectively, in the debt-ridden RCL.