NCLT directs Reliance Home Finance to repay dues to its NCD holders

The Mumbai bench of the National Company Law Tribunal directed Ltd (RHFL) to repay its debt obligations to nearly 19,000 debenture holders in the next five months.

The IDBI Trusteeship Services, a trustee to RHFL bondholders, had approached the NCLT to recover Rs 3,500 crore of investment after the company missed repayment obligations. The bondholders had also made RHFL’s holding company,

, a party in the case. The Trustee is representing all investors who are not part of the Intercreditor Agreement (ICA).

“The order establishes our valid claims, which have to be part of the resolution process,” one of the non-ICA investors told ET.

Bondholders of RHFL had subscribed to the Non-Convertible Debentures between November 2016 and January 2017 in various trenches via public issues.

“The debenture holders who are substantial in number are also members of the public. Therefore, their prerogative in timely receipt of interest against their investment (debentures) cannot be sacrificed at the altar of public interest,” said a bench preceded by a judicial member Janab Mohammed Ajmal and a technical member V. Nallasenapathy in its order of June 21.

Separately, a resolution process is undergoing with the committee of creditors endorsing Authum Investment and Infrastructure as the successful bidder. This now has to come to the trustee, which will likely put up the matter for voting among non-ICA members.

“The order could well pave the way for retail investors, who will have their share of repayments out of the resolution plan,” said a senior executive involved in the matter.

A mailed query to RHFL and Reliance Capital did not elicit any response.

Trouble started when Anil Ambani promoted Reliance Capital, informed the stock exchange last year on January 3 that as directed by the lead bank to the ICA, the amounts due and payable by the Reliance Home Finance on 3 January 2020 in respect of unsecured NCDs are delayed.

In two separate petitions, bondholders sought the tribunal’s intervention to recover Rs 2,850 crore and Rs 476 crore as principal and additional interest, respectively.

RHFL argued that an order in favour of the petitioner (IDBI Trusteeship) would not be in the interest of the R1 (RHFL) or its body of creditors and even in the interest of the debenture holders, whom the petitioner represents.

“The principal outstanding against the secured NCDs represent only 23% of the total principal debt burden of the R1. …Therefore, an order in terms of the relief sought would cause serious prejudice to the R1 and the ICA lenders who so far have refrained from enforcing their security,” argued RHFL.

However, setting aside these arguments, the tribunal observed in its 20-page order that “the amount of debentures is substantial and the R1 (RHFL) having taken the deposit, there is no reason why any indulgence should be shown to the respondents on the ground that any resolution process is underway.”

On June 21, RHFL said in its regulatory filing that the lenders had selected Authum Investment and Infrastructure Limited (Authum) as the successful bidder to acquire the company.

In this case, counsel Prateek Seksaria and Ameya Gokhale of Shardul Amarchand Mangaldas & Co represented IDBI Trusteeship while senior counsel Venkatesh Dhond and law firm Mulla & Mulla CBC appeared for RHFL and Reliance Capital.