Reliance Naval debt resolution stuck as bidder seeks more time to pay

Hazel Mercantile sought additional time to pay the upfront cash as it cited market upheaval for its inability to raise funds by the deadline

Lenders of Hazel Mercantile may agree to give more time to the firm to pay upfront cash for the acquisition of Reliance Naval and Engineering (RNEL), a bankrupt shipyard company. This comes after Hazel moved the National Company Law Tribunal (NCLT) seeking two more months after failing to meet the July 23 deadline.

Hazel Mercantile sought additional time to pay the upfront cash as it cited market upheaval for its inability to raise funds till deadline. 

Hazel had bid Rs. 2,100 crore for RNEL, a company earlier owned by Anil Ambani, after the company defaulted on loans worth Rs. 13,000 crore. The company was sent to the NCLT for debt resolution under the Insolvency and Bankruptcy Code (IBC), 2016.

Hazel was supposed to pay Rs. 263 crore by July 23. This was the second deadline set by the company to pay the upfront cash after it was unable to meet the payment by March this year. The NCLT will hear the petition next week.

A banker said just like Jet Airways, the debt resolution of Reliance Naval is stuck as the bidder is facing liquidity issues. "We have agreed to offer more time to the bidder and if the bidder backs out, the company will be sent for liquidation," said a banker close to the development.

The banker said Hazel will be asked to pay part of its offer to keep the company.

According to the resolution plan timeline, BSE-listed Swan Energy-owned Hazel Mercantile has to pay Rs. 312 crore by December 2023 to the lenders, and another instalment of Rs. 196 crore by December next year.

It has agreed to pay another Rs. 188 crore by December 2025, Rs. 280 crore by December 2026, and the remaining Rs. 864 crore by the end of December 2027. With the upfront cash coming in late, bankers are expecting the payment milestones to change further.

The company was sent for debt resolution under the IBC in January 2020. Hazel Mercantile's resolution plan was approved by the Ahmedabad branch of the NCLT in December last year.

No Resolution 

• January 2020: Reliance Naval and Engineering sent for debt resolution after it defaults on Rs 13,000 cr of loans
• December 2022: NCLT clears Hazel Mercantile's offer of Rs 2,100 cr
• March 2023: Hazel seeks additional four months time to pay upfront cash of Rs 263 cr
• July 2023: Fails to pay entire upfront cash, seeks more time