Reliance Capital Insolvency: Timeline Extended Till Jan. 31
Multiple litigations led to further delay in the insolvency resolution of the Anil Ambani-promoted Reliance Capital.
The insolvency court on Tuesday granted another extension of 90 days for Reliance Capital Ltd.'s resolution process.
The deadline for the insolvency process is set to end on Nov. 1.
This is the third extension by the Mumbai bench of the National Company Law Tribunal, basis the administrator's request.
Jan. 31 has been set as the new deadline as the Anil Ambani-promoted Reliance Capital is facing multiple litigations before the NCLT and the Supreme Court.
In a pending matter before the NCLT, the court is yet to determine whether IDBI Trusteeship Services Ltd. should surrender the shares of Reliance General Insurance Ltd. to the common pool of assets available for resolution. These shares were pledged by Reliance Capital for the redemption of non-convertible debentures issued by Reliance Home Finance Ltd.
RHFL had issued non-convertible debentures, which it failed to redeem. As part of the restructuring terms of these NCDs in 2019, RHFL's promoter—Reliance Capital—had pledged its entire shareholding in Reliance General Insurance in favour of IDBI Trusteeship—the debenture trustee.
When Reliance Capital failed to redeem the NCDs, IDBI Trusteeship invoked the pledge.
A connected dispute over the shares also lies before the apex court. Here the dispute pertains to alleged violation of the Insurance Act in the assignment of pledge towards IDBI Trusteeship. The law says that transfer of over 5% shares of an insurance company can only be done with the permission of the insurance regulator.
The apex court will also decide on the competency of Reliance Capital to manage the affairs of Reliance General Insurance.
The question of whether Reliance Capital is a “fit and proper person” or whether it is within the solvency margin to oversee the management and affairs of Reliance General Insurance is yet to be determined.