Differences emerge between Anil Ambani’s dependency capital and lenders over resolution plan


Differences have emerged between the lenders and the RBI-appointed administrator of indebted Reliance Capital Ltd (RCL) over the process of resolving the various subsidiaries or clusters of the company that are on the block, sources said.

No less than 54 offers were received for the resolution of RCL and its multiple subsidiaries as of March 25, which was the last date for submission of Expressions of Interest (EOI).

Of these, around 22 EoIs are for RCL as a business, while the rest are for individuals or a combination of the company’s eight subsidiaries, sources said.

RCL had offered two options to all bidders. Under the first option, companies could bid for Reliance Capital, including its eight subsidiaries or clusters. The second option gave companies the freedom to bid for its subsidiaries, individually or in combination, sources said.

The main clusters of RCL are Reliance General Insurance, Reliance Health Insurance, Reliance Nippon Life Insurance, Reliance Asset Reconstruction and Reliance Securities.

Differences have emerged between the Administrator, the Committee of Creditors (CoC) and their respective legal advisers over subsidiaries and their resolution process, sources said, adding that all of RCL’s subsidiaries are for-profit entities, although capitalized companies and their management teams. businesses are also intact.

Therefore, according to the IBC, no compliant plan can be submitted for these subsidiaries as there is no turnaround requirement as none of these entities are under stress and are well run businesses, they said. .

The difference of opinion between the administrator and the CoC on the methodology to be adopted for the sale of these subsidiaries causes a delay in the finalization of the request for resolution plan document (RFRP), they said.

According to the original schedule, the RFRP was to be sent to all companies that had submitted EoIs by April 5, but according to sources, the CoC and the administrator have not yet finalized the terms of the RFRP document.

The RFRP document sets guidelines for the submission and evaluation of a debtor’s resolution plan. The RFRP must be agreed between the administrator and the CoC before it is released to all potential candidates for resolution.

The differences of opinion relate to whether to invite price offers for individual clusters under the second option and how to obtain financial offers for subsidiaries in an IBC-compliant manner. .

According to sources, the CoC intends to force the formation of a consortium on the cluster-level bidders to submit a resolution plan at the enterprise level, but the administrator is not in favor of it.

The admin’s main concerns with this approach relate to the mechanism for forming a consortium of bidders at the cluster level, and who will be responsible for not executing these plans.

Many RFRP suggestions by the CoC do not comply with the Insolvency and Bankruptcy Code (IBC) and therefore lead to friction with the administrator, sources said.

The Reserve Bank of India (RBI) had, on November 29, replaced the board of directors of Reliance Capital Ltd (RCL) due to payment defaults and serious governance problems.

The RBI has appointed Nageswara Rao Y as administrator under the company’s Corporate Insolvency Resolution Process (CIRP).

It is the third major non-bank financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).

RBI then filed a CIRP application against Reliance Capital in the Mumbai bench of the National Company Law Tribunal (NCLT). There is a three-member advisory board comprising ex-State Bank of India DMD, Sanjeev Nautiyal, ex-Axis Bank DMD Srinivasan Varadarajan and ex-Tata Capital managing director and CEO, Praveen P Kadle.

In February this year, the RBI-appointed administrator invited Expressions of Interest (EOI) for the sale of Reliance Capital.


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