Amidst a poor response from bidders, the lenders of Reliance Capital (RCap) have proposed hiving off two group companies’ assets into a separate trust to speed up the firm’s resolution process. They have also waived the condition for an earnest money deposit (EMD) of Rs 75 crore on the first date of submission.

The proposal by the Committee of Creditors (CoC) is to separate the assets and liabilities of Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF), which have a combined debt of about Rs 25,000 crore, into a trust. This is to bring down the debt of RCap and for faster conclusion of the Corporate Insolvency Resolution Process, sources close to development said.

RCap has a debt of about Rs 20,000 crore, and together with that of RCF and RHF, the amount stands at about Rs 45,000 crore.

“Moving RCF and RHF into a new trust structure would mean that Rs 25,000 crore would be excluded from this resolution process. Further, this would also allay fears of the bidders of a further delay as the subsidiaries, which were acquired by Authum Investment earlier, are still awaiting regulatory approvals to close the deal,” one of the sources said.

In July 2021, Mumbai-based Authum Investment & Infrastructure emerged as the successful bidder for RCF and RHF, with a bid of 1,600 crore and2,911 crore, respectively. However, the process could not be completed; on November 29, 2021, the Reserve Bank of India (RBI) superseded RCap’s board following payment defaults and governance issues, and appointed Nageswara Rao Y as administrator for a bankruptcy process.

Authum Investment is yet to get RBI approvals for the bids, and litigation pending in different courts has also delayed the takeover process. Moving the assets to a trust will give Authum Investment another 12-month window to complete the deal, the sources said.

The CoC has also decided to waive the EMD condition on the first date of submission, due to the poor response. Bidders will only have to submit EMD along with the final resolution plan. “This is yet another attempt by the CoC to keep the resolution process going,” a banking source said.

While RCap had initially received 54 expressions of interest (EOIs), currently only two bidders — Yes Bank and a consortium led by Piramal Group — are actively engaged in the resolution process. The lenders and the administrator are keen on receiving bids for RCap as a core investment company, which is option-1 under the resolution process.

Under option-1, bidders have to acquire the entire company, while under option-2 they could place bids for eight different businesses (clusters) of RCap, which included general insurance, life insurance and the securities business.

On July 1, the RCap CoC had extended the deadline to submit resolution plans by a month to August 10, after five prominent bidders backed out of the race. While this is the fourth time the submission date has been extended, the date for completion, November 2, remains unchanged.