Reliance Commercial lenders to consider DB Realty’s offer to settle dues

The lenders of Reliance Commercial Finance Ltd. (RCFL) are meeting this week to consider a proposal by DB Realty to settle its outstanding loans of ₹633 crore.

DB Realty and two other group entities, namely Goregaon Hotel and Bamboo Hotel, had used ₹633 crore in loans from RCFL between 2016 and 2018, and eventually defaulted. These loans were rated NPA by RCFL between April 2019 and December 2020.

RCFL’s insolvency

Meanwhile, RCFL itself is undergoing a debt resolution process. The Supreme Court recently upheld the vote on Reliance Commercial Finance Ltd debentures and paved the way for the resolution of a default of over ₹9,000 crore by the company. Last July, the lenders of RCFL, a subsidiary of Reliance Capital, led by Anil Ambani, had approved Authum Infrastructure and Investment’s offer of ₹1,629 crore under the guidelines of the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets), 2019.

“Lenders will take a call on Authum’s offer in light of SC’s nod. The 18 lenders, led by Bank of Baroda (BOB), will also discuss DB Realty’s single settlement proposal for its default of ₹633 crore in RCFL,” a source said.

Full recovery likely

According to banking sources, DB Realty’s OTS proposal is likely to be rejected by lenders as they offer less than 50% of the total outstanding dues of ₹633 crore. The company offered to pay only ₹306 crore.

According to a banker involved in the process, the entire DB Realty exposure of ₹633 crore with RCFL is fully collateralized by DB Realty’s assets. Therefore, instead of accepting the single settlement at a nearly 50% discount, lenders could seek full recovery by initiating collection proceedings against DB Realty and its developers, including invoking their personal guarantee, said the banker.

RCFL had commenced insolvency proceedings against DB Realty, Goregaon Hotel and Bamboo Hotel, in January 2020. These proceedings are still pending before the NCLT Mumbai.

Published on

September 12, 2022

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