Key Points
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 nonperforming 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.AgenciesVidarbha.
MUMBAI: Anil Ambani-promoted 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)...
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 any competing bid goes against the idea of fair competition in the Swiss Challenge process..
On July 21, Reliance ARC was selected as one of the three bidders eligible to bid for the debt and later that week it sent a letter to lenders highlighting the onerous clauses of the EOI...
