Reliance Capital Limited welcomed the Reserve Bank of India's (RBI) decision to resolve the company's debt in accordance with the Insolvency and Bankruptcy (IBC) Code.
In a statement, the company blamed the complexity of litigation for defaults and assured to "fully co-operate with the administrator appointed by the RBI for the expeditious resolution of its debt in the best interests of all stakeholders".
According to RCL's statement, the complexity of litigation initiated by certain secured and unsecured lenders, resulting in the pendency of over ten cases in various fora, including the Supreme Court, Mumbai High Court, Delhi High Court and Debt Recovery Tribunal (DRT), has effectively stalled the resolution of the company's debt, despite its best efforts for the past over two years.
"The company owns profitable and valuable operating businesses, through its 100 per cent shareholding in Reliance General Insurance Company (RGIC) and 51 per cent shareholding in RNLIC (a Joint Venture with Nippon Life Co. of Japan), which represent the majority of the value of the Company being a Core Investment Company (CIC), besides other financial investments," the statement further read.
As per RCL, the company has no outstanding loans from banks and approx 95 per cent of its debt is in the form of debentures.
"The company looks forward to expeditious resolution of its debt and continuation as a well capitalised going concern through the IBC process, in the overall interests of all its stakeholders, including lenders, customers, employees and shareholders," it added.
The RBI on Monday superseded the board of directors of RCL in view of the defaults by the company in meeting various payment obligations to its creditors and "serious governance concerns which the Board has not been able to address effectively".
The RBI said in a statement that it has appointed Nageswar Rao, former Executive Director of Bank of Maharashtra as the Administrator of the company under Section 45-IE (2) of the RBI Act.
The central bank said it will shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
The bank said it will also move NCLT, Mumbai, for appointing the Administrator as the Insolvency Resolution Professional.
( With inputs from ANI )
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