Differences between the administrator and the lenders regarding the debt resolution process of Reliance Capital, know what is the whole matter

Till March 25, 54 bids were received for debt resolution of RCL and its subsidiary units.

Differences have arisen between the administrator appointed by the Reserve Bank and the lenders regarding the debt resolution process of the debt-ridden company Reliance Capital Limited (RCL). Till March 25, 54 bids were received for debt resolution of RCL and its subsidiary units.

Debt-ridden company Reliance Capital Limited ,Reliance Capital, debt resolution process of (Debt Resolution) Reserve Bank regarding (RBI) Administrators and Lenders appointed by (Lenders) differences have arisen between Sources said 54 bids had been received till March 25 for debt resolution of RCL and its subsidiary units. This was the last day for sending the Expression of Interest (EOI) to RCL. Out of these, 22 EoIs have come as a single company for RCL. Whereas, the rest of the bids have been made for different of its eight subsidiaries. Two options were given to all the bidders on behalf of RCL.

In the first option, bidding could be done for RCL and its subsidiaries, while in the second option, the facility of bidding was given for subsidiaries either individually or in combination.

Not agreed between legal advisors and administrators of banks

Subsidiary units of RCL include Reliance General Insurance, Reliance Health Insurance, Reliance Nippon Life Insurance, Reliance Asset Reconstruction and Reliance Securities. However, there are reports of differences arising between the administrator appointed by the Reserve Bank and the lender banks over the conduct of the insolvency process for recovery of outstanding loans. According to sources, an agreement has not been reached between the legal advisors and administrators of banks regarding RCL’s subsidiary units and their debt resolution process.

According to sources, the reason for this difference is that all the subsidiary units of RCL are running in profit and they also have no shortage of capital. In such a situation no resolution plan can be presented for these subsidiaries under the Insolvency and Bankruptcy Code (IBC). In fact, none of these subsidiaries is facing any pressure and their business is also running properly.

Sources said that there is a delay in finalizing the resolution plan due to lack of consensus on the method to be followed for the sale of RCL’s subsidiary. According to the schedule, by April 5, all the bidding companies had to submit the resolution plan document. But so far its terms have not been finalized. According to sources, the Committee of Creditors (CoC) is in favor of forming a tie-up of bidders only in case of bidding for subsidiary companies. Whereas, the administrators are not convinced about the alliance arrangement.

On November 29, 2021, the Reserve Bank dissolved the board of RLC and appointed Nageswara Rao Y as administrator to conduct the insolvency process.

(with language input)

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