Debt holders of the Anil Ambani-promoted Reliance Commercial Finance Ltd (RCFL) have voted in favour of the takeover of the company by Authum Investment & Infrastructure, two people familiar with the development said.
However, the implementation of the resolution plan will be subject to the Bombay High Court order, which is scheduled to hear the court next on December 16. The court had ordered the balloting, scheduled for December 8, to go ahead.
“The voting lines closed last evening and according to the results which are not yet public, just above 75% of those that voted have supported the plan. However, it is too early to say whether this will be enough to implement the resolution as the matter is still in court,” said a person familiar with the vote.
On Monday, a division bench of the Bombay High Court had refused to stay the vote slated for December 8 to vet lenders’ selection of a preferred bidder for the Reliance Capital subsidiary.
The Securities and Exchange Board of India (SEBI), the regulator for bondholders, had sought the stay, after a single-judge bench of the high court in October ruled that the voting can be held based on the trust deed signed by the bondholders. The deed signed as per central bank guidelines expects only 75% of the bondholders to vote, but Sebi’s rule says all debenture holders must participate in such proposals.
Lenders to RCFL have already approved the resolution plan by Authum on July 15 2021. RCFL owed creditors more than Rs 9,000 crore and Authum has offered Rs 1,240 crore which meant an 86% write-off for the creditors.
The vote by bondholders is a forward step in the resolution of the company but is still subject to court orders. On Monday while refusing to stay the vote, the division bench had directed the parties to file written submissions in the court by December 12. The next date of hearing is December 16.
“Not all debenture holders have voted which the regulator may point out to in the next hearing. Also, out of the bond holders who voted just more than 75% have given an okay which is slightly above the necessary majority. All these points will be looked at by the court because SEBI will not allow this to go through without presenting its side of the argument,” said the person cited above.
Vistra ITCL, the trustee for the bondholders, had delayed the vote till the court order because of the Sebi rule.
Bondholders own more than 90% of the debt in RCFL, and a majority of that is held by banks and financial institutions.
The RCFL debt resolution could have an impact on the insolvency process of Reliance Capital, initiated by the RBI on November 29. Bankers are hoping that the resolution process, which has gone on for close to two years, is not derailed.
