Amid Reliance Capital's insolvency proceedings, Torrent Investment is seeking a refund of ₹75 crore deposited as Earnest Money Deposit (EMD) under the Insolvency and Bankruptcy Code (IBC), sources told CNBC-TV18.
Earnest Money Deposit or EMD serves as a token of seriousness and commitment from bidders participating in insolvency proceedings under the IBC. It's a standard procedure where interested parties deposit a certain sum to express their genuine intent to acquire the distressed asset.
According to sources, Torrent Investment has initiated steps to retrieve its ₹75 crore EMD, which was deposited in relation to the acquisition bid for Reliance Capital.
The administrator is examining Torrent's request, however, any definitive decision regarding the refund is poised to await the outcome of the Supreme Court hearing. Torrent Investment's plea challenging the second round of auction for Reliance Capital's sale is pending in the Supreme Court.
The National Company Law Tribunal (NCLT) earlier approved Hinduja Group company IndusInd International Holdings' (IIHL) ₹9,861 crore bid for Reliance Capital on February 27. IIHL emerged as the highest bidder to take over the debt-ridden conglomerate in the second round of the auction concluded in April 2023.
In November 2021, the Reserve Bank of India (RBI) superseded the board of Reliance Capital due to payment defaults and serious governance issues and applied for initiation of a Corporate Insolvency Resolution Process (CIRP) at the Mumbai Bench of the NCLT. Request for resolution plans (RFRP) was issued on April 26, 2022, and four resolution applicants — Torrent Investments, IIHL, Cosmea Financial-Piramal Group and Oaktree Capital — submitted their bids.
In October 2023, Torrent Investments Pvt. Ltd filed a Letter of Urgency in the Supreme Court challenging the March 2 order of the National Company Law Appellate Tribunal (NCLAT) that allowed Reliance Capital’s lenders to initiate the second auction, as a part of its corporate insolvency resolution process.
The legal tussle began after Torrent submitted its bid of ₹8,640 crore for RCap, but the rival bidder the Hinduja Group through IndusInd revised its bid to ₹9,000 crore. Subsequently, the committee of creditors (CIC) proposed an extended challenge mechanism in pursuit of higher value for the company and the second round the Hinduja Group emerged as the highest and sole bidder.
(Edited by : Amrita)
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