Deadline for bids for Reliance Capital to end today

29 Aug 2022 , 08:12 AM

Due to investor concerns regarding the company’s most valuable subsidiary, Reliance General Insurance Company, the time for filing offers for the indebted Reliance Capital Ltd (RCL) closes on Monday.

Invoking the pledge of Reliance Capital’s 100% ownership of Reliance General, IDBI Trusteeship Services Limited, acting as a debenture trustee on behalf of Credit Suisse, transferred the shares to its account in November 2019.

The IDBI Trustee’s refusal to release the shares of the general insurance firm for resolution under the Insolvency and Bankruptcy Code (IBC) appears to have put a stop to the Administrator’s plan to include Reliance General in RCL’s insolvency procedure, according to news reports.

Investors are hesitant to submit bids since there is uncertainty over the shares of Reliance General, according to sources.

Five times in the past, the Committee of Creditors (CoC) extended the deadline for bid submission, but only four or five parties remained interested in the resolution of RCL, including Piramal, Torrent, Yes Bank, and IndusInd Bank.

The CoC even disregarded the requirement of depositing Rs75 crore in Earnest Money Deposit (EMD) on the first submission date due to a lacklustre response.

According to news reports, the CoC has proposed that both entities would be held in a separate Trust for the settlement of the Authum Investment and Infrastructure in order to soothe the fears of the bidders on the RCF and RHF.

The CoC and the Administrator, according to sources, are more interested in receiving offers under Option-1, or for Reliance Capital as a CIC (Core Investment Company).

Bidders have the opportunity to compete for one of eight RCL businesses or clusters, including general insurance, life insurance, ARC, the securities industry, etc., under Option 2.

On November 29 of last year, the Reserve Bank of India (RBI) replaced the RCL board due to payment defaults and significant governance difficulties.

Nageswara Rao Y was chosen by the RBI to serve as the company’s corporate insolvency resolution process (CIRP) administrator.

The central bank recently began bankruptcy procedures under IBC against this third sizable Non-Banking Financial Company (NBFC). Srei Group NBFC and Dewan Housing Finance Corporation (DHFL) were the other two.

The National Company Law Tribunal’s Mumbai bench received a plea for the beginning of CIRP from the RBI (NCLT).

The RBI-appointed administrator had requested expressions of interest for the sale of Reliance Capital in February of this year.

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