The lenders who decided to hand over 600 MW Power Plant of Vidharbha Industries Power Ltd (VIPL) to a tainted Asset Reconstruction Company (ARC), have much to answer for. CFM Asset Reconstruction Pvt Ltd – the acquirer of Rs 2,500 crore debt for Rs 1,265 crore – was allowed to take away the asset for a differential of a mere Rs 5 crore over the one time settlement offer price made by Anil Ambani led Reliance which owned VIPL.

Discretion, favoritism, rigging, pre-arranged decisions all these factors show up in the way the processes were conducted.

First, as per the Swiss Challenge process the lenders were supposed to determine the starting price in the band of 5-15 per cent of the initial base price of Rs 1,220 crore that was offered by CFM, which means in the range of Rs 1,281 crore to Rs 1,403 crore. Disregarding this, the lenders decided to settle for far less at Rs 1,265 crore.

The sequence of events surrounding the Joint Lenders meeting, also reveals that the whole process was rigged, a step-wise narration of which has been put together in the cover story. Surreptitiously, lenders accepted CFM’s marginal offer and closed the process. Reliance ARC was notified of its disqualification from participating in the process after the deal was closed. The one time settlement offer of Reliance at Rs 1,260 crore was used as a benchmark and CFM with Rs 5 crore addition was facilitated.

As required, CFM deposited the amount in lender accounts after taking it from Dickey Alternative Investment Trust, a strategic investor fund that is active in the NCLT companies buying circuit.

The process also raises questions given CFM’s track record. It is an ARC, which has faced IT searches, RBI special audits and was issued show cause notices.