Business & Investment

NCLT order to start bankruptcy proceedings against RCap tonight

The Reserve Bank of India (RBI) has moved a court to initiate bankruptcy proceedings against Reliance Capital’s involvement under Section 227 of the Bankruptcy and Bankruptcy Law (IBC), the National Corporate Law Tribunal (NLCT) on Monday. Withheld the order.

A bench run by Pradeep Narhari Deshmukh and Kapal Kumar Vohra will announce the order tonight. The RBI moved NCLT last week to initiate bankruptcy proceedings against the company after NCLT replaced the board and appointed a manager for default and governance issues.

The company’s promoter states that it supports bankruptcy filings. This is the third time in a few years that the central bank has replaced the board of directors and has begun bankruptcy proceedings against a non-bank financial institution (NBFC), which was once considered systemically important. It replaced the DHFL Board of Directors in November 2019 and the two NBFCs of the SREI Group in October this year.

Central banks have introduced a much stricter set of regulations on NBFC, making NBFC rules equivalent to bank rules. However, the proceedings against Reliance Capital may not have a significant impact on the sector, as the group to which they belong has long been in trouble and has repeatedly failed to repay debt to lenders or bondholders. The latest is November 27th. ..

Reliance Capital defaulted on YES Bank on October 13, 2019 and urged a redemption clause. YES asked the company to redeem the non-convertible bonds it held. It is estimated that YES Bank had an NCD worth 987 rupees of Reliance Capital.

The RBI has also appointed an advisory board tasked with helping managers appointed to the company perform their duties. The three-member advisory board includes Sanjeev Nautiyal, a former Deputy Managing Director (DMD) of the State Bank of India (SBI). Former DMD of Srinivasan Varadarajan, Axis Bank. Former MD and CEO of Tata Capital Limited, Praveen PK adle.

Reliance Capital said in a statement to the exchange that it welcomed the move by the RBI to settle the company’s debt as follows: And we will work fully with the manager appointed by the RBI for the prompt resolution of that debt in the best interests of all stakeholders.

“The complexity of proceedings initiated by certain secured and unsecured lenders has led to more than 10 proceedings pending in various forums, including the Hon’ble Supreme Court, Mumbai High Court, Delhi High Court, and DRT. Brought to you, in effect, despite the best efforts of the last two years, the company’s debt. “

The company has no outstanding loans from banks, and the statement said that about 95 percent of its debt is in the form of corporate bonds.

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NCLT order to start bankruptcy proceedings against RCap tonight

https://www.business-standard.com/article/companies/nclt-order-on-initiating-insolvency-proceedings-against-rcap-this-evening-121120600497_1.html NCLT order to start bankruptcy proceedings against RCap tonight

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