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 to initiate the Corporate Insolvency Resolution Process (CIRP) against the company. The umbrella bank had replaced the board of directors of Reliance Capital, citing defaults and governance issues.
Earlier Monday, the NCLT’s Mumbai bench comprising Pradeep Narhari Deshmukh and Kapal Kumar Vohra reserved the order. The bench later admitted the RBI’s request.
In a statement, the company’s promoters said they supported RBI’s request to refer the company to NCLT under Section 227 for expedited resolution.
Article 227 of the Insolvency and Bankruptcy Code (IBC) allows the government to inform, in consultation with financial sector regulators, financial service providers or categories of PSF for the purposes of insolvency proceedings and liquidation.
The company looks forward to a swift resolution of its debt and the continuation of its well-capitalized business through the IBC process, in the general interest of all its stakeholders, including lenders, customers, employees and shareholders, has the company said in the statement.
Reliance Capital owes its creditors more ??19,805 crore, the majority of the amount through bonds under the trustee Vistra ITCL India.
The company is the third NBFC to be resolved under the IBC after Dewan Housing Finance (DHFL) and Srei Group, based in Kolkata.
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