Reliance ARC files plea against Vidarbha Industries’ debt sale

economictimes.indiatimes.com:

Reliance ARC has submitted a writ petition against the Reserve Bank of India in the Bombay High Court opposing the Swiss challenge method during the debt sale of Vidarbha Industries Power, which has drawn interest from funds like Varde Partners-backed Aditya Birla ARC and Avenue Capital-backed Asset Reconstruction Company of India (Arcil). Vidarbha Industries Power, currently in bankruptcy and promoted by Anil Ambani, has a total debt of Rs 2,569 crore. Reliance ARC has challenged the central bank’s circular of September 24, 2021, calling it arbitrary as it confers “unwarranted and unreasonable benefit” in favour of a Prospective Transferee. The deadline for bidders to submit firm offers was August 8, but the hearing for that petition will take precedence, a bank source said. The matter could be taken up for hearing by the end of this week, another source said. In its petition, Reliance ARC has raised concerns over the Swiss Challenge Auction process, according to a lawyer source. The concern is that when an ARC makes a bid to buy a troubled asset or a non-performing asset (NPA), it automatically becomes an initial bidder and this gives the ARC the exclusive right to match any bid that comes in during the Swiss Challenge Process, the lawyer explained.

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This means even if another bidder submits a competing offer, the initial bidder has the right, as per the RBI circular, to match that offer without needing to improve or raise the bid amount and this way, the initial bidder can secure the asset without having to exceed the highest bid amount, Reliance ARC has said. Reliance ARC has argued that this unlimited right of the initial bidder to simply match