Torrent bank guarantee for RCap to be released

Torrent Group’s bank guarantees, submitted as earnest money deposit (EMD) for Reliance Capital (RCap)’s resolution process, are required to be released, while the petition pending before the Supreme Court will continue to be heard.

“The bank guarantees given in lieu of the EMD have to be released within 14 days of the National Company Law Tribunal (NCLT)’s final approval for the resolution process. Torrent has initiated discussions for the release of the bank guarantees, which is expected soon,” a source close to the development told FE. The bank guarantees were in lieu of ₹75-crore EMD.

Since the tribunal has approved the process in February, the bank guarantees of all the bidders are expected to be released soon. However, the petition filed before the Supreme Court challenging the second round of e-auctions will continue, the source added.

Another source said the committee of creditors (CoC) of RCap will seek legal opinion before releasing the bank guarantees.

On February 27, the Mumbai bench of the NCLT approved the resolution plan submitted by the Hinduja Group firm, IndusInd International Holdings (IIHL). However, the company needs other regulatory approvals – including those from the Securities and Exchange Board of India, Reserve Bank of India and the Insurance Regulatory and Development Authority of India, among others – and conclusion of a lawsuit pending before the Supreme Court before it could take over RCap’s assets.

In June 2023, RCap lenders approved a resolution plan submitted by Mauritius-registered IIHL with a whopping 99.6% of the total votes polled in its favour.

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However, a ‘letter of urgency’ petition filed by Torrent Investments, a Torrent Group company, on October 3, 2023, seeking the Supreme Court’s intervention for an “urgent hearing and final disposal of all pending appeals”, is yet to be closed. The firm, a bidder in the first round of auctions, had also challenged the second round of auctions convened for the sale of RCap’s assets.

The first round of the auction ran into a legal tangle after IIHL had made an all-cash bid of ₹9,000 crore, which was challenged by Torrent before the NCLT. Torrent later revised its bid of ₹8,640 crore by offering the entire amount in cash upfront, against ₹3,750 crore offered earlier in the auction.