Include ‘Swiss Challenge Method’ in insolvency cases: Banks to govt

Under the ‘Swiss Challenge’ method, the highest (H1) bid in the first round of bidding becomes the base price for bidders, including the H1 bidder, to place counter-bids in the second round of bidding.

The banks have asked the Ministry of Corporate Affairs to include bidding under the ‘Swiss Challenge Method’ in the insolvency code.
 
The move is aimed at curbing litigious bidders from acquiring stressed assets under the Insolvency and Bankruptcy Code (IBC).
 
Under the ‘Swiss Challenge’ method, the highest (H1) bid in the first round of bidding becomes the base price for bidders, including the H1 bidder, to place counter-bids in the second round of bidding.
 
The stressed asset will go to the highest bidder in the second round. If no other bidder is able to better the H1 bid, the top bidder in the first round is declared the successful bidder.
 
The was a recent proceedings related to Binani Cements, where UltraTech has offered to increase its bid after Dalmia Bharat was declared the top bidder.
 
UltraTech Cement made a revised bid of Rs 7,840 crore for Binani Cement following an order by the bankruptcy court that its lenders should consider the offer even though it had lost out to the Dalmia Bharat team, people aware of the development said. 
 
Dalmia Bharat Ltd-controlled Rajputana Properties Pvt. Ltd (RPPL) challenged the NCLAT order in Supreme Court, which refused to stay UltraTech Cement’s revised bid of from being considered in the ongoing resolution process for Binani Cement.
 
Source: BusinessLine, Media reports

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