Instead, the sources said, the lenders recommended the ‘Black Box’ approach, which means that the modalities of the Challenge Mechanism will be decided by the CoC but will be communicated to the bidders only at a later stage.
This also means that the bidders will have to submit their resolution plans amid complete uncertainty on how this process will work and impact the bidding after the submission of binding bids, the sources said.
The ‘Challenge Mechanism’ gives lenders the power to oppose any resolution plan as and when they want.
Some bidders have raised concerns with the administrator about the introduction of this new clause at this late stage of the bidding process, sources said, adding there was no mention of this mechanism in the Request for Resolution Plan (RFRP) document.
It was decided in the meeting on Friday that all the bidders, while submitting their resolution plans, will be required to give written consent that they will agree to and participate in the Challenge Mechanism in whatever form it is implemented by the lenders at a later stage, the sources said.
The last date for submitting binding bids for Reliance Capital Ltd (RCL) and its subsidiaries is November 28.
RCL had offered two options to all the bidders. Under the first option, companies could bid for Reliance Capital Ltd, including its eight subsidiaries or clusters. The second option gave the bidders freedom to bid for its subsidiaries individually or in a combination.
RCL has eight businesses that are on the block. These include general insurance, life insurance, health insurance, securities business and asset reconstruction, among others.
The Reserve Bank of India (RBI) had on November 29 last year superseded the board of RCL in view of payment defaults and serious governance issues.
The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.
Reliance Capital is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the IBC.
The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL). The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the NCLT.
In February this year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.