[ad_1]
To expedite the sale process of a bankrupt Reliance Capital (RCap), its lenders have decided to hive off Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF) into a trust for a separate resolution process.
The proceeds from the sale of these two carved-up companies will flow directly to the lenders of RCap – currently undergoing an insolvency resolution.
An asset-sale committee, which will be formed to supervise the sale of these two companies, will comprise three members drawn from the committee of creditors (CoC), the administrator, and Deloitte.
In the event of failure or delay in implementing the resolution process of the housing finance company and the non-banking financial company (NBFC) arm, the bidders have been told that the trustee, along with the asset-sale committee members, will decide on an alternative sale process in the next one year or as decided by the committee.
The combined debt of these two entities is about Rs 25,000 crore. The proposed trust structure will ensure bidders of RCap do not have to service this debt. Several lenders, including Life Insurance Corporation of India (LIC), have made total claims of Rs 25,333 crore against RCap.
In July 2021, the lenders had selected Authum Investment & Infrastructure, a Mumbai-based NBFC, as the successful bidder for RCF and RHF, with a bid of Rs 1,600 crore and Rs 2,911 crore, respectively.
ALSO READ: LIC finds no takers among ARCs for Rs 3,400-crore Reliance Capital bonds
After the Reserve Bank of India (RBI) sent the parent firm – RCap – to the bankruptcy court last December, the entire process was renewed, monitored by an RBI-appointed administrator and the National Company Law Tribunal.
After the administrator sought expressions of interest (EoIs), 54 companies submitted their EoIs. Of these, only two – Piramal Group and YES Bank – are actively engaging with the CoC; the rest have lost interest.
According to sources, the poor response to the resolution plan forced the CoC to extend the financial bids fourfold. The new deadline for submission of the plan is now August 10.
The RCap resolution has been fraught with regulatory hurdles since inception. The precondition to forming a consortium by different bidders for the bidding of RCap’s multiple business clusters and making all cash bids drove a majority of the bidders away.
In fact, LIC’s plan to sell its exposure in bonds worth Rs 3,400 crore issued by RCap did not find any takers among asset reconstruction companies. A source said IDBI Capital, which has been mandated to sell the bonds, will extend the deadline to July 22. The bonds are trading at a 70 per cent discount.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
[ad_2]
Source link
