In a big relief to Authum Investments and Infrastructure, the Supreme Court on Friday asked the company to implement its ₹2,887-crore resolution plan for the takeover of Anil Ambani’s Reliance Home Finance by March 31.
The court, however, said that dissenting debenture holders should be given the option to accept the terms of the resolution plan or they can pursue other legal remedies to recover their dues.
A bench led by Justice BR Gavai asked Authum to make the payments before March 31.
Deciding the case on similar lines as in the case of Reliance Commercial Finance (Sebi versus Rajkumar Nagpal), the apex court directed that the dissenting debenture holders should be provided with an option to accept the terms of the resolution plan.
Alternatively, the dissenting debenture holders will have a right to stand outside the proposed plan framed under the lenders’ inter-creditor agreement and pursue other legal remedies to recover their entitled dues, it said.
The top court noted that small investors, whose exposure is up to ₹5 lakh, were benefiting to the extent of 100% of their principal amount. “Even debenture holders whose exposure is more than ₹5 lakh are receiving 23.24% of their principal amount, similar to the case of Rajkumar Nagpal,” it said.
Banks led by Yes Bank (13% of the debt) and Bank of Baroda (11%) stand to benefit because of the delay as the loan recoveries in RHFL over the period have swelled to ₹3,100 crore from ₹1,600 crore at the time the letter of intent was issued.
“The total value of the resolution plan is now ₹3,300 crore out of which ₹3,100 crore is cash in the company. Shapoorji’s ₹200 crore will be adjusted from this amount and Authum will put in another ₹200 crore, so the haircut that banks took has reduced because of the delay,” said a person familiar with the transaction.
Authum’s offer will hence increase to ₹3,100 crore or a 72% haircut for secured creditors versus ₹2,887 crore or a 74% haircut to the total dues of ₹11,200 crore when the plan was agreed upon in 2021.
BoB Capital Markets, the investment banking arm of BoB, and consultancy firm EY were process advisors to lenders in the resolution.
Meanwhile, the administrator for RHFL’s parent company Reliance Capital, Y Nageswara Rao has called for an extraordinary general meeting (ECM) of RHFL shareholders to approve the resolution plan on March 25. Authum has committed to completing the resolution by March 31.
RHFL is among the biggest in Anil Ambani’s financial services portfolio, which includes commercial finance and insurance businesses. Lenders had started the resolution process for both RHFL and Reliance Commercial Finance (RCFL) before parent Reliance Capital was referred to the bankruptcy process by RBI in late November 2021.
