The bid submission deadline for heavily indebted Reliance Capital is set to end on Monday. Despite several deadline extensions, the response from investors for Reliance Capital and its subsidiaries has been very lukewarm. Investors appear to be cautious about bidding for Reliance Capital amid concerns over its most valuable arm, Reliance General Insurance Company. Currently, the completion of the company’s insolvency resolution process is extended until November 1, 2022.
It is known that the CIRP administrator of Reliance Capital wanted to include Reliance General Insurance in the insolvency process. However, DBI Trusteeship Services, which acts as trustee of the debentures on behalf of Credit Suisse, refused to release the shares of the general insurance company under the IBC.
On behalf of Credit Suisse, IDBI Trusteeship Services invoked Reliance Capital’s 100% pledge in Reliance General in November 2019.
Sources told PTI that the administrator wanted to include Reliance General as part of RCL’s insolvency process, but the trustee IDBI refused to release the shares of the general insurance company for the resolution process under the Insolvency and Bankruptcy Code (IBC). They added, “it looks like it hit a roadblock.”
According to the sources, investors are wary of submitting offers in the absence of clarity on Reliance General’s shares.
With respect to Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF), the sources said they went through a separate resolution process with Authum Investment and Infrastructure long before RCL was referred to NCLT.
Reliance Capital has a consolidated debt of around Rs40,000 crore. RBI had sought to initiate the CIRP against Reliance Group in the National Company Law Court (NCLT) in Mumbai.
Subsidiaries of Reliance Capital which are pushed to resolve insolvency are – Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance and Reliance Commercial Finance.
Nageswara Rao Y, appointed by RBI, is the administrator of the insolvency process of Reliance Capital.
To reduce bidder concerns about the RCF and RHF, sources revealed that the two entities will be held in a separate trust for the resolution of Authum Investment and Infrastructure.
In addition, the sources indicated that the Committee of Creditors (CoC) and the Administrator are interested in receiving offers under Option-1.
Previously, lenders had only given bidders two options. First, the bidders were allowed to acquire Reliance Capital along with its eight subsidiaries. Reliance Capital will become the lead investment company here.
Second, bidders can also submit resolution plans, even for a single subsidiary.
The CoC has extended the bid submission deadline for Reliance Capital and its subsidiaries by five times. However, very few entities have shown interest in the companies supported by Anil Ambani. Some of them are Piramal Enterprises, Yes Bank, Torrent Group and IndusInd Bank among others.
On Friday, Reliance Capital, in its regulatory filing, said: “The Honorable NCLT Mumbai…has extended the deadline for completion of the CIRP by a period of 60 days, i.e. until the 1st November 2022”.
Last week on the BSE, shares of Reliance Capital closed at ₹14.64 each up 4.95%.
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