Lenders of Sintex Industries plan Swiss challenge auction to avoid liquidation

Lenders of may hold a Swiss challenge auction or inter-se bidding if resolution applicants of the bankrupt textile company do not improve their offers substantially, said two people aware about the matter.

The auction route will be undertaken mainly to get improved offers so as to prevent the company from going into liquidation since the offers from all four bidders are below the liquidation value, they said. The Reliance Industries-Assets Care & Reconstruction Enterprise (ACRE) team, a Welspun entity,

Ventures and have submitted resolution plans last month.

In a Swiss auction, the highest bidder will have the right to match a counteroffer received by the RP. Under the inter-se bidding process, each party gets a chance to increase its offer in every successive round until the highest bidder emerges.

ET reported on January 11 that the resolution professional, Pinakin Shah, who received the highest bid from the Reliance-Acre team, had asked bidders to submit improved unconditional offers. The four resolution applicants are yet to submit a revised resolution plan to the RP, the people said. As per the plan presently submitted to the RP, the Reliance Industries-ACRE team has offered ₹2,363 crore which includes ₹2,280 crore to financial creditors and the remaining to trade creditors and employees. In addition to this, they also offer 10% equity to the financial creditors and ₹500 crore for working capital requirements. ACRE is an asset reconstruction company backed by Ares SSG Capital.

Welspun’s Easygo Textile offered ₹2,300 crore to financial creditors, of which ₹2,200 crore is for financial creditors and the remaining is for trade creditors and employees.

The resolution plan from Himatsingka Ventures is ₹2,210 crore of which ₹2,200 crore is for financial creditors while GHCL plans is ₹2,040 crore, of which ₹2,000 crore is for financial creditors, the sources said. RIL, ACRE, Welspun Group, Himatsingka Ventures and GHCL did not respond. The RP in an email response said that he cannot disclose confidential information.


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