Reliance Capital bidders wary of legal issues now

Mumbai: As the deadline for the submission of binding bids approaches, the bidders of Reliance Capital, including Hinduja, Torrent, Zurich, and Piramal have flagged off various legal issues to the lenders and Administrator, involving Reliance Capital and its subsidiaries.These legal issues involve a cumulative liability of Rs22,000 crore, and they need quick resolution for the successful closure of RCAP's resolution plan.

According to sources, the bidders are likely to make a condition precedent of these issues to any payment to the lenders.

The two big issues flagged off by the bidders are the impending resolution of Reliance Home Finance Ltd (RHFL) and the legal battle between the Administrator and IDBI Trusteeship for the control of Reliance General Insurance's shares, which is pending in the NCLT.

Authum Investment and Infrastructure Ltd had been selected as the successful bidder for RHFL in June 2021, but the resolution process has not yet been completed due to various litigation involving the debenture holders. The total debt of RHFL is Rs11,500 crore. As far as Reliance General Insurance is concerned, the Independent actuarial Tower Watson has valued this business at Rs9,500 crore. Apart from these, the two other legal cases flagged off by the bidders are Axis Bank's claim of Rs150 crore against Reliance Capital, which the bank has lost in the NCLT, and a case involving Administrator and IndusInd Bank, involving arbitration of Nippon Asset Management shares. The total liability in this matter is Rs650 crore. The last date for submitting binding bids is November 28.

The quick resolution of these legal matters is a challenge for the Administrator for the successful closure of the RCAP resolution plan. Reliance Capital had received 14 non-binding bids for its multiple businesses. Six companies had submitted bids for the entire company, while the rest of the bidders had submitted bids for its multiple subsidiaries.