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The lenders of Reliance Commercial Finance Ltd. (RCFL) are meeting this week to consider a proposal by DB Realty to settle its ₹633 crore outstanding loans.
The DB Realty and two other group entities, that is Goregaon Hotel and Bamboo Hotel, had availed ₹633 crore worth of loans from RCFL between 2016 and 2018, and eventually defaulted on the repayment. These loans were classified as NPA by RCFL between April 2019 and December 2020.
RCFL’s insolvency
Meanwhile, RCFL itself is undergoing a debt resolution process. The Supreme Court has recently upheld the voting on debentures of Reliance Commercial Finance Ltd and paved the way for the resolution of over ₹9,000-crore loan default by the company. Last July, lenders to the Anil Ambani-led RCFL, subsidiary of Reliance Capital, had approved Authum Infrastructure and Investment’s bid of ₹1,629 crore under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019.
“The lenders will be taking a call on the bid by Authum in the light of the SC nod. The 18 lenders, led by the Bank of Baroda (BOB), will also be discussing the one-time settlement proposal by DB Realty for its ₹633 crore default in RCFL,” said a source.
Full recovery likely
According to banking sources, the OTS proposal of DB Realty is likely to be rejected by the lenders as they are offering less than 50 per cent of the total outstanding dues of ₹633 crore. The company has offered to pay only ₹306 crore.
According to one banker involved in the process, the entire DB realty exposure of ₹633 crore with RCFL is fully secured against the assets of DB Realty. Therefore, instead of accepting the one-time settlement with a nearly 50 per cent haircut, lenders could look for full recovery by initiating recovery proceedings against DB Realty and its promoters, including invoking their personal guarantee, the banker said.
RCFL had initiated insolvency proceedings against DB Realty, Goregaon Hotel and Bamboo Hotel, in January 2020. These proceeding are still pending before the NCLT Mumbai.
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