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Monday, January 30, 2023

Reliance Capital Committee of Creditor rejects all offers, considering liquidation

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The creditors’ committee (COC) from Trust Capital (RCAP), decided at its Wednesday meeting to reject all binding bids it received from bidders on Monday.



The COC is now considering liquidating Reliance Capital, under the IBC’s newly introduced Ordinance 6(A), which allows each individual company to be sold separately.

According to sources, the decision to reject the bids was made because the lenders believe that the value offered by all bidders is too low.

For the financial service providers, RBI has special powers under section 227 of the IBC to refer companies to insolvency for debt resolution. Reliance Capital was the third financial services company to be referred for insolvency by the RBI.

The other two are DHFL and SREI.

DHFL was sold to Piramal for 50 percent of the liquidation value, while the SREI settlement process is still ongoing.

The rejection of the Reliance Capital bids proves that the RBI’s use of section 227 has not worked in favor of financial services lenders.

Notably, Reliance Capital has received 5 bids under option 1 for the Reliance Capital Core Investment Company (CIC) as the deadline for submitting binding offers expired on Monday, November 28.

The bidders of option 1 are Hinduja, Torrent, Oaktree, Cosmea Financial and Piramal consortium and UAVRCL. Of these five bidders, UVARCL bid on a fee basis, meaning it has not submitted a resolution plan for RCAP. It will further sell RCAP assets and make payments to lenders, if and when the sale takes place.

No separate bids were received for Reliance General Insurance Company (RGIC) and Reliance Nippon Life Insurance Company (RNLIC)

Cosmea-Piramal has offered Rs 5,231 crore for RCAP while Hinduja’s offer is Rs 5,060 crore.

The size of the bids from Torrent and Oaktree is Rs 4,500 crore and Rs 4,200 crore respectively.

Out of these four, the Cosmea-Piramal consortium has offered Rs 4,250 crore in advance payment while Hinduja has offered Rs 4,100 crore in advance to the lenders.

The upfront payment by Torrent and Oaktree is in the range of Rs 1,000 crore.

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