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Reliance Capital: NCLT admits RBI's plea for insolvency proceedings against debt-ridden company

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Last week, the Reserve Bank of India has superseded the board of directors of Reliance Capital Ltd owing to governance issues and payment defaults in meeting multiple payment obligations. The central bank had appointed Nageswar Rao Y, former executive director, Bank of Maharashtra, as the administrator.

Reliance Capital: NCLT admits RBI's plea for insolvency proceedings against debt-ridden company
The National Company Law Tribunal (NCLT) on Monday admitted the Reserve Bank's plea to initiate insolvency resolution proceedings against Reliance Capital. Last week, the Reserve Bank of India (RBI) filed an application for the initiation of Corporate Insolvency Resolution Process (CIRP) against the company. The apex bank had superseded Reliance Capital's board, citing defaults and governance issues.
Earlier on Monday, the Mumbai bench of the NCLT comprising Pradeep Narhari Deshmukh and Kapal Kumar Vohra reserved the order. Later, the bench admitted the RBI's application. In a statement, the company's promoters said it supports the RBI application of referring the company to the NCLT under section 227 for the fast track resolution.
Section 227 of the Insolvency and Bankruptcy Code (IBC) enables the government to notify, in consultation with the financial sector regulators, Financial Service Providers or categories of FSPs for the purpose of insolvency and liquidation proceedings. The company looks forward to expeditious resolution of its debt and continuation as a well capitalised going concern through the IBC process, in the overall interests of all its stakeholders, including lenders, customers, employees and shareholders, the company said in the statement.
Reliance Capital owes its creditors over Rs 19,805 crore, majority of the amount through bonds under the trustee Vistra ITCL India. The company is the third NBFC to go for resolution under the IBC after Dewan Housing Finance (DHFL) and Kolkata-based Srei Group.
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