Big 4 firm Deloitte has been picked to provide support to Nageswara Rao Y, the RBI appointed administrator for the insolvency resolution process of Reliance Capital, sources in the know told Moneycontrol.
“ Deloitte was selected earlier this week following a bidding process. They have come on board,” said one of the persons cited above.
A second person confirmed the same and said the Deloitte team would help in matters of compliance, filings, communication, and other aspects.
“ Processes under the IBC ( insolvency and bankruptcy code) are complex and challenging and require a big execution team,” he added.
To be sure, the RBI had earlier appointed an advisory panel to assist Rao. The panel consists of former State Bank of India DMD Sanjeev Nautiyal, former Axis Bank DMD Srinivasan Varadarajan, and former MD and CEO of Tata Capital Praveen P Kadle. Law firm AZB & Partners is the legal counsel to the RBI administrator.
The two persons above spoke to Moneycontrol on the condition of anonymity.
Email queries sent to Deloitte and Reliance Capital were left unanswered at the time of going to press. Moneycontrol could not elicit an immediate comment from the administrator and is awaiting the response to a mail sent to him. This article will be updated as soon as we hear from the parties.
THE RELIANCE CAPITAL SAGA
On November 29, the RBI superseded the board of directors of Reliance Capital citing defaults by the firm in meeting various payment obligations to its creditors and serious governance concerns which were not effectively addressed by the board. It also appointed Nageswara Rao Y, ( former Executive Director, Bank of Maharashtra) as the administrator of the firm.
Later on December 6, the Mumbai bench of the National Company Law Tribunal admitted the petition for the insolvency resolution process against Reliance Capital.
Reliance Capital has become the fourth NBFC, following Dewan Housing Finance Corporation and two Srei Group firms, to face bankruptcy proceedings triggered by action from the banking regulator.
Reliance Capital had defaulted on interest payments on loans worth Rs 624 crore drawn from Housing Development Finance Corporation (HDFC) and Axis Bank, the company informed stock exchanges on November 27, 2020. The company has defaulted on Rs 4.77 crore to HDFC and Rs 0.71 crore to Axis Bank in terms of the interest payment as of October 31.
The firm borrowed term loans from HDFC for a period of six months to seven years at 10.6-13 percent and from Axis Bank at 3-7 years for 8.25 percent.
In a stock exchange clarification, the company said it was unable to proceed with asset monetisation due to the prohibition on the company to dispose of any assets following court orders. Hence, the delay in debt servicing, it said.
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