The bidders of Reliance Capital’s (RCap) bankruptcy process have sought settlement of the company’s multiple legal issues totalling ₹20,000 crore before completion of the resolution plan. The move assumes significance as the insolvency process is inching towards closure, with the deadline to submit binding bids ending on November 28.
The bidders – including a consortium led by Piramal Enterprises, Hinduja Group, Torrent Group and Zurich Insurance – have moved both the lenders and the administrator to the bankruptcy process seeking to address the issue “immediately”.
They are seeking a precedent condition in the resolution process that the payments to the lenders would be made only after settlement of all the legal issues, sources close to the development said.
According to the bidders, a quick resolution is necessary for the successful closure of RCap’s resolution plan, as the deadline to complete the entire process ends on January 31.
There are a number of legal cases, including those filed by both financial and operational creditors against Reliance Capital and its subsidiaries, and lawsuits between administrators and trustees.
One of the major issues that the lenders want to be immediately resolved is the legal battle between the administrator and IDBI Trusteeship on the custody of Reliance General Insurance Company’s (RGICL) shares. The shares are currently in the possession of IDBI Trusteeship Services (ITSL), which in its capacity as a debenture trustee of Credit Suisse had invoked the shares in November 2019. Being the custodian of the shares, ITSL would have to submit it to the administrator for inclusion in the ongoing insolvency process.
On its part, ITSL was looking to recover its debt, but now with the commencement of the corporate insolvency resolution process, the administrator has sought to take control of RGICL’s shares. The issue is pending before the Mumbai bench of the NCLT. Tower Watson, an independent actuarial, had earlier valued RGICL at ₹9,500 crore.
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Another major legal issue the bidders want to put an end to is the impending resolution of Reliance Home Finance (RHFL), which has a total debt of ₹11,500 crore. In June 2021, Authum Investment and Infrastructure was selected as the successful bidder for RHFL, but the resolution process is yet to be completed. The delay in completion of the process is due to various litigations involving debenture holders.
The bidders have also flagged Axis Bank’s ₹150-crore claim against RCap, which the NCLT had ruled in favour of the former Anil Ambani group company, and an arbitration of Nippon Asset Management share involving the administrator and IndusInd Bank. The total liability of Nippon Asset Management is pegged at ₹650 crore.