RBI Files Application For Insolvency Proceedings Against Reliance Capital

RBI Files Application For Initiating Insolvency Proceedings Against Reliance Capital

RBI has begun process to initiate insolvency proceedings against Reliance Capital

The RBI on Thursday filed an application for initiation of Corporate Insolvency Resolution Process (CIRP) against debt-ridden Reliance Capital at the Mumbai bench of the National Company Law Tribunal.

Just days after the Reserve Bank of India (RBI) had superseded the board of Anil Ambani-promoted Reliance Capital Limited (RCL) owing to payment defaults and other issues, it filed an application on Thursday for initiating corporate insolvency resolution process (CIRP) against the debt-ridden entity.

The application was filed by the RBI with the Mumbai bench of the National Company Law Tribunal (NCLT). 

The central bank had also appointed Y Nageswar Rao, a former executive director of the Bank of Maharashtra, as the administrator of the company.

In a statement, the central bank said that it has filed the application for initiating CIRP proceedings against Reliance Capital under various sections of the Insolvency and Bankruptcy Code (IBC).

As the RBI has moved NCLT, an interim moratorium would be applicable on Reliance Capital.

The interim moratorium would also be on transferring, encumbering, alienating or disposing of by the corporate debtor, any of its assets or any legal right or beneficial interest therein.

As per the Financial Service Providers Insolvency Rules, an interim moratorium commences on and from the date of filing of the application till its admission or rejection.

In September, Reliance Capital in its annual general meeting had informed shareholders that the company’s consolidated debt was Rs 40,000 crore.

The company reported a consolidated loss of Rs 1,156 crore for the second quarter this fiscal against Rs 6,001 crore income. During 2020-21, the company has posted a loss of Rs 9,287 crore on a total income of Rs 19,308 crore. 

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