Bad reaction to Reliance Capital’s resolution: the creditors’ committee postpones the date to June 30

Reliance Capital’s (RCap) resolution process elicited poor response, with only eight companies expressing interest in bidding for the indebted company.

Of the eight “potential resolution claimants” (PRAs), only three – an onsortium led by Piramal Group, Yes Bank and HDFC Ergo – held their own internal meetings. The resolution process administrator received inquiries and clarifications from five others, while the other 46 PRAs remained “incommunicado”, sources close to the development told FE. The names of the five bidders, who had requested clarification, could not immediately be determined.

Following the lukewarm response, the Creditors’ Committee (CoC) has now decided to extend the deadline for submitting resolution plans to June 30 instead of May 26, they added. “The cold response from the majority of ARPs could be due to the unfavorable economic conditions and the challenging global environment,” one of the sources said, but did not elaborate.

Earlier in March, RCap secured a total of 54 EoIs from high-profile bidders including ICICI Lombard, Tata AIG and Nippon Life Insurance, with the majority of suitors interested in acquiring the business in its entirety. Other bidders included HDFC Ergo, Bandhan Financial Holdings, Cholamandam Investment, Adani Finserv, Yes Bank, OakTree Capital, Blackstone, New Quest, Indusind International, Brookfield, TPG Capital, Zurich, Ares SSG Capital, ArpWood Partners, Capri Global Holdings, Edelweiss Alternative, International Asset Reconstruction Company, JC Flower, Motilal Oswal, Square Four Housing and UV Multiple Asset Investment.

Following a good response in March, the administrator had also extended the deadline by two weeks from the previous March 11, with some bidders requesting more time. Creditors of the former Anil Ambani Group company were claiming Rs 23,666 crore in dues.

The resolution plan document only provides a “cash only” option for bidders from its subsidiaries, while those bidding for the entire company can make cash and deferred payment bids. However, there will be no possibility of making deferred payment offers for subsidiaries. All cash offers received for the bankrupt business would have the highest priority, in accordance with the Request for Resolution Plan (RFRP) issued by the lenders.

The lenders would be entitled to the money on the company’s books, and it will not be considered part of collection proceeds for the winning bidder.

On November 29, 2021, the Reserve Bank of India replaced RCap’s board of directors following defaults and governance issues, and appointed Nageswara Rao Y as bankruptcy process administrator. The regulator has also filed a request to initiate a corporate insolvency resolution process against the company. In April, Credit Suisse and Axis Bank – two lenders to RCap – had taken the indebted company to the National Company Law Tribunal (NCLT), seeking recovery of debts worth Rs 760 crore.

In February this year, the RBI-appointed administrator invited EoIs to sell the assets of RCap.