The resolution process of Reliance Capital (RCap) has evoked a poor response, with just eight companies showing interest in bidding for the debt-laden firm.
Of the eight “prospective resolution applicants” (PRA), only three – a Piramal Group-led onsortium, Yes Bank and HDFC Ergo – have held their own internal meetings. The administrator to the resolution process received enquiries and clarifications from another five, while the remaining 46 PRAs went “incommunicado”, sources close to the development told FE. The names of the five bidders, who had sought clarifications, could not be immediately ascertained.
Following the lukewarm response, the committee of creditors (CoC) has now decided to extend the deadline to submit resolution plans to June 30 from the earlier May 26, they added. “The cold response from the majority of the PRAs could be due to the adverse economic conditions and challenging global environment,” one of the sources said, but did not elaborate.
Earlier in March, RCap got a total of 54 EoIs from prominent bidders, including ICICI Lombard, Tata AIG and Nippon Life Insurance, with majority of the suitors interested in acquiring the firm in its entirety. The 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 earlier March 11 as certain bidders had sought more time. Creditors of the former Anil Ambani group company were seeking Rs 23,666 crore in dues.
The resolution plan document provides only a “cash-only” option for bidders of its subsidiaries, while those bidding for the entire company can make both cash and deferred payment bids. However, there will be no option to make deferred payment bids for subsidiaries. All cash bids received for the bankruptcy firm would be given utmost priority, as per the request for resolution plan (RFRP) issued by the lenders.
The lenders would have the right to the cash on the company’s books, and it will not be considered as part of the recovery proceeds for the successful bidder.
On November 29, 2021, the Reserve Bank of India superseded RCap’s board following payment defaults and governance issues, and appointed Nageswara Rao Y as the administrator for the bankruptcy process. The regulator also filed an application for initiation of corporate insolvency resolution process against the company. In April, Credit Suisse and Axis Bank – two lenders to RCap – had dragged the debt-laden firm 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 for sale of RCap’s assets.