Reliance Commercial Fin resolution: HC allows bondholders to vote on Dec 8

Court asks all parties to file written submissions by December 12 and will hear the matter on December 16

The Bombay High Court on Monday refused to stay the meeting of bondholders of Reliance Commercial Finance (RCF) on December 8, which will vote on the resolution plan of the company. The resolution plan was cleared by the banks in July this year.

The HC asked all parties to file written submissions by December 12 and will hear the matter on December 16. The HC was hearing a petition filed by the lenders of Reliance Commercial Finance lenders seeking to vote on the proposal but the market regulator, Sebi filed a caveat. The market regulator said in October that all voting with respect to debt resolutions will require 100 per cent voting series wise.

On the lenders' plea, the high court directed debenture trusteeship to hold meeting of debenture holders and vote on the resolution plan.

On July 15, the lenders of RCF had selected Authum Investment and Infrastructure’s resolution plan as the successful bidder for the company after it offered Rs 1,600 crore offer for the company as against banks exposure of about Rs 8,200 crore.  

The implementation of the plan was subject to approval of the non-ICA lenders including debenture holders. But despite five months since the plan was approved by the lenders, the meeting was not called till recently.

Debenture holders expressed concern at such an approach which impedes on their contractual rights as defined in the debenture trust deed requiring 75 per cent majority in value. Lenders are also concerned about the impact any delay will have on the already deteriorating asset quality of RCFL. The rising employee attrition is also impacting recovery of RCFL's loans.

Besides, banking sources said any delay will also impact retail debenture holders that were being paid in full under the plan. But they will now receive nothing if the plan fails and the company is sent for liquidation.