LIC's Move To Sell Reliance Capital's Debt To ARC Before Deadline Upsets Creditors And Bidders

The report said that the Committee of Creditors of RCL of which LIC is a member, is upset as to why LIC has begun a parallel process to sell its debt so close to the bid submission deadline

LIC is conducting a Swiss Challenge process to invite bids from Asset Reconstruction Companies (ARCs) to sell its exposure in RCL.

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LIC is moving to sell its Rs 3,400 crore secured principal debt of Reliance Capital Ltd (RCL) to an asset reconstruction company (ARC) days ahead of the deadline to submit binding bids. This has upset many lenders and bidders, reported PTI. LIC is conducting a Swiss Challenge process to invite bids from Asset Reconstruction Companies (ARCs) to sell its exposure in RCL. November 28 is the last date for submitting binding bids for RCL and its subsidiaries.

PTI cited a source saying that prospective bidders will be asked for better offers. The report added that the Asset Care and Reconstruction Enterprise will be given the first right to match the counteroffer.

The last date to submit the bids is November 25 and the deadline for submission of binding bids for Reliance Capital is November 28.

The report said that the Committee of Creditors (CoC) of RCL of which LIC is a member, is upset as to why LIC has begun a parallel process to sell its debt so close to the bid submission deadline. LIC is attempting to finalise a transaction 3 days before the binding bids deadline. This move has upset the other members and bidders, the report added. 

There are two options for the bidders from RCL. Either the companies could bid for RCL, including its eight subsidiaries or clusters or bidders can bid for subsidiaries individually or in combination. RCL has eight businesses including general insurance, life insurance, health insurance, securities business, and asset reconstruction, among others.

On November, 29 last year, RBI replaced the board of RCL amid payment defaults and serious governance issues. Nageswara Rao Y was appointed as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP). Rao invited expressions of interest for the sale of RCL in February this year. 

Reliance Capital was the third large non-banking financial company (NBFC) against which RBI has initiated bankruptcy proceedings under the IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).