Pending litigations against Reliance Capital Ltd (RCL) could delay the ongoing debt resolution process initiated by the lenders.

RCL’s corporate insolvency resolution process under IBC commenced on December 6, 2021 pursuant to an application filed by the Reserve Bank of India before NCLT, Mumbai. The RBI appointed Y Nageswara Rao, as the Administrator of the company. Following this, Credit Suisse filed its claim with RCL’s Administrator in the CIRP process for an amount of about ₹1,074 crore.

 The Administrator rejected a majority of Credit Suisse’s claim amounting to approx. ₹660 crore and recognised a claim of only ₹414 crore on the grounds that the said claim of ₹660 crore does not constitute a financial debt of RCL.

Subsequently, Credit Suisse challenged the Administrator’s decision by filing an application before NCLT, Mumbai .

Separately, Vistra ITCL India Limited, in its capacity as debenture trustee of the NCDs issued by Reliance Capital Limited, has filed a commercial suit before the Bombay High Court in May 2020. Vistra challenged the validity and invocation of the pledge of the shares of Reliance General Insurance Company Limited created in favour of IDBI Trusteeship Services Limited on behalf of Credit Suisse and others.

“Given that the Credit Suisse’s claim is secured by a pledge of the shares of RGICL which is RCL’s most valuable asset, it appears that RCL’s entire resolution process could be tainted by the past and present litigation pertaining to Credit Suisse’s claim and the consequent pledge of the Reliance General Insurance Company Limited (RGICL) shares, said an industry source.

Vistra also filed an interlocutory application in the commercial suit seeking interim relief pending the final disposal of the suit. This is still pending before the Bombay High Court.

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