JC Flowers ARC seeks bids to sell ₹2,613 crore of bad loans via Swiss challenge mode

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JC Flowers Asset Reconstruction Company (ARC), acting as the trustee for JCF YES Trust, is seeking bids to sell ₹2,613 crore of retail, small and medium enterprises (SME) bad loans via Swiss challenge auction, prompted by an anchor bid of ₹237.5 crore.

Under the Swiss challenge auction mode, an interested party presents their anchor bid to auctioneer, who subsequently calls for counter bids from other investors. The auctioneer then chooses the highest bidder based on counteroffer received, if any, and offers a chance to the first bidder to counter the offer. In case the original bidder is unable to pay higher price for the asset, the asset is sold to the other highest bidder.

JC Flowers has put on block a total of 15,096 bad loans under the Swiss challenge auction, and the last date for submission of expression of interest from bidders is November 6. The last date for submission of final bid is November 22. Successful bidder will have to close the deal on 100 per cent cash basis, in a single lot. Interested bidders will also have to submit Rs 2.4 crore as earnest money deposit to participate in the auction.

The NPAs on block were part of Yes Bank’s legacy bad loan portfolio. In December 2022, Yes Bank had sold its ₹48,000-crore stressed asset loan portfolio to JC Flowers for ₹11,200 crore in a 15:85 cash-to-security receipts structure, wherein JC Flowers paid only 15 per cent of the consideration in cash, with the remainder in security receipts.