https://jaydeepmitra.com/

Srei bidders refuse to pay earnest deposit


Bidders for the bankrupt Srei group companies refused to make the earnest money deposit (EMD) of ₹150 crore on Wednesday – which was the last day for submitting a resolution plan – due to a dispute with the administrator over unusual conditions attached to the deposit, said two people aware of the development.

Administrator Rajnish Sharma received two plans on Wednesday – one from Arena Investors in partnership with a Varde Partners affiliate and another joint offer from Shon Randhawa and Rajesh Viren Shah – but he pushed back the deadline to submit the final bids to August 19.

Since both bidders did not furnish the EMD, he was left with no choice but to extend the deadline, the people said.

As per the terms of the request for proposal, a plan is considered void if the bidder does not make the EMD of ₹150 crore and provide a ₹550-crore performance guarantee. The heart of the dispute is one of the terms of the RFP, which says the EMD money would be forfeited if the Reserve Bank of India did not endorse the successful resolution applicant as “fit and proper”. and Srei Equipment Finance are lenders regulated by the RBI.

Both bidders objected to the condition of forfeiting the EMD on the grounds that it was not within their control if the regulator decided to reject their names. According to bankers, the condition was imposed since the entire exercise would be wasted if the regulator did not endorse the bidder. “Such a condition would thus put the onus on the successful bidder to convince the regulator,” said a bank official.

To resolve the dispute, bidders proposed that the EMD be returned at the end of one year if the regulator did not approve the successful bidder’s name within this timeframe. The administrator rejected this proposal, the people cited above said.

As per the rules governing finance companies undergoing insolvency, once a bidder’s plan is approved by a majority of lenders, it would require approval not only from the adjudicating authority but also from the RBI. Only after the banking regulator approves the successful bidder as ‘fit and proper’ can it conclude a deal. In the case of all other sectors, the successful bidder can acquire a bankrupt company if the adjudicating authority endorses the resolution plan.

If the bidding date for Srei companies was not extended, both bids received by the administrator on Wednesday evening would have been deemed void.



Source link

Spread the word!

Leave a Comment

Your email address will not be published. Required fields are marked *

back to top