Admin invites Eois by March 11, final shortlist expected by March 26

The RBI-appointed administrator for Reliance Capital (RCap), led by Anil Ambani, has invited expressions of interest for the company under the Insolvency and Bankruptcy Code (IBC) by March 11, 2022 .

The Reserve Bank of India had replaced Reliance Capital’s board of directors on November 29 last year “in view of RCL’s failures to meet various payment obligations to its creditors and serious governance issues that the board of directors administration has not been able to effectively resolve”.

Nageswara Rao Y, the administrator of RCap, posted the EOI documents on the company’s website last Friday, inviting applications by March 11. The administrator said the provisional list of potential candidates will be released by March 16 and the final list of potential candidates will be released by March 26.

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All Potential Resolution Candidates (PRAs) may submit Expressions of Interest either for RCap as a going concern under Option 1. Under Option 2, Expressions of Interest may be submitted for RCap activity to include RCap as a going concern, as well as one or more of the eight identified business lines.

These eight business clusters include:

1) Group I – Business of RCL including an investment in Reliance General Insurance Company Ltd. and Reliance Health Insurance Ltd

2) Group II – Business of RCL including investment in Reliance Nippon Life Insurance Company Ltd

3) Group III – Business of RCL including investment in Reliance Asset Reconstruction Company Ltd

4) Group IV – Business of RCL comprising investments in Reliance Securities Ltd, Reliance Financial Ltd, Reliance Wealth Management Ltd and Reliance Commodities Ltd

5) Group V1 – Business of RCL including Reliance Home Finance Ltd (RHFL)

6) Group VI1 – Business of RCL including Reliance Commercial Finance Ltd (RCFL)

7) Group VII – Business of RCL including investments in real estate

8) Group VIII – RCL activity (residual) including but not limited to investments and other assets not covered above.

Potential resolution candidates may submit Expressions of Interest under Option 1 and/or for any combination of clusters under Option 2, but the Administrator noted that the Creditors’ Committee and reserves the right to give greater weighting to expressions of interest under Option 1.

Eligibility

Potential resolution candidates would have to meet the fit and proper criteria and be eligible to submit offers under IBC Section 29a, which prohibits participation by defaulting promoters.

The administrator added that the deadline for submitting expressions of interest may be extended from time to time in accordance with applicable laws if necessary.

For financial institutions, including any investment company, asset management company, alternative investment fund, fund house, private equity (PE) investor, non-bank financial company (NBFC), the asset minimum under management ranges from Rs 10 to 200 crore to be eligible, with minimum funds committed and available between Rs 5 and 100 crore.

For other private/public limited liability companies/limited liability companies/legal persons/any other potential candidates for resolution, the group may include: (a) entities holding at least 26% of the capital of the PRA, (b ) entities in which the PRA has at least 26% ownership; or (c) entities in which an entity holding at least 26% of the capital of the PRA also holds at least 26% of the capital. Provided that the entity concerned has been part of the group for at least 3 years at the time of the submission of the EOI.

For ARPs belonging to a consortium, at least one of the members must hold or propose to hold at least 26% of the total capital participation or economic interest in the consortium. All other members should hold a minimum stake of 10% each in the consortium.

RCAP Finance

Reliance Capital has at least 20 subsidiaries and 5 associated companies, where Reliance Capital itself is a core investment company. Reliance Capital Ltd had an autonomous debt of Rs 21,781 crore as of October 31, 2021.

RCL also holds a 51% stake in Reliance Nippon Life Insurance and a 49% stake in Reliance Asset Reconstruction Ltd. The size of its consolidated balance sheet stood at Rs 68,183 crore in September 2021, and debt securities at Rs 18,320 crore, with borrowings at Rs 8,585 crore in September 2021.

Financial creditors have made claims of Rs 30,879 crores against RCap, of which Rs 24,067 crores of claims have been admitted so far. Operational creditors claimed Rs 29 crore and other creditors Rs 3 crore.

(Edited by : Jomy Jos Pullokaran)

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