Stay order, a hurdle to Reliance Home debt resolution

A legal case filed by a Shapoorji Pallonji Group entity against Reliance Home Finance Ltd is coming in the way of the latter’s debt resolution by the lenders.

According to sources, the debt resolution is at the final stage with four bidders vying for RHFL’s assets. But a stay order from the Delhi High Court against RHFL in November, 2019 is posing a challenge. According to the stay order, RHFL is prohibited from disposing, alienating, encumbering either directly or indirectly or otherwise part with the possession of any its assets. An SP group joint venture is a secured lender with ₹200 crore of exposure to RHFL.

Two of the bids received — from ACRE and Authum Investments — are for all the assets of the distressed housing finance company while the two other bids — from Capri Global and Avenue-Arcil — are for only the retail assets of the company.

Bankers are hopeful that they will finalise the successful bidder for RHFL’s assets in the next couple of weeks.

SP Group did not respond to an e-mail query sent by BusinessLine on the issue.

Led by Bank of Baroda, lenders to RHFL and Reliance Commercial Finance Ltd had, in August 2020, initiated the resolution plan and had sought bids for the two companies.

Bidders can submit EOIs and bids for the acquisition of the entire shareholding and business of RHFL or alternatively bid for the full retail book.

The resolution process is being managed by BoBCapital Markets (BoB Caps) and Ernst & Young (EY).

According to a regulatory filing by RHFL on February 26, it has net cash (including cash equivalent, liquid mutual fund investments, fixed deposits) of over ₹1,500 crore.

“However, the delay in debt servicing is due to prohibition on the company to dispose off, alienate, encumber either directly or indirectly or otherwise part with the possession of any assets, pursuant to order dated November 20, 2019 passed by the Hon’ble Delhi High Court,” it said.

RHFL said its total financial indebtedness including short term and long term debt amounted to ₹13,047.59 crore. The total amount of outstanding borrowings from banks and financial institutions stands at ₹4,329.32 crore.