Lenders set to recover settlement amount for Reliance home finances

Eight months after agreeing to sell Anil Ambani-promoted Reliance Home Finances (RHFL) to Autumn Investments and Infrastructure, lenders are finally set to recover the settlement amount later this week, two people aware of the development told ET.

The Delhi High Court on December 21 vacated a stay on the distribution of proceeds from the sale of RHFL after two disputing creditors – a Shapoorji Pallonji entity and lenders led by Bank of Baroda – agreed on a ‘conditional settlement’.

Authum Investment will distribute ₹1,565 crore to 33 lenders that had signed an intercreditor agreement (ICA), the people cited above said.

As per the terms of the settlement, Shapoorji Pallonji (SP) entity Always Remember Properties Pvt Ltd, which claimed ₹200 crore, will receive a settlement amount of ₹46 crore. That is proportional to the amount distributed to other lenders as per the resolution plan and the court order.

Following an appeal by SP Group in November 2019 seeking a settlement of ₹200 crore, the Delhi High Court prohibited RHFL from disposing of, alienating, or encumbering either directly or indirectly any of its assets. This prevented lenders from concluding the debt resolution process of RHFL.

As per the settlement terms, a sum of ₹154 crore – the balance amount claimed by SP entity – will be deposited with the Delhi High Court. The order stated that this amount “will be paid to the appropriate party based on the outcome of the arbitration” between the parties involved.

The biggest beneficiary of the distribution of proceeds would be Yes Bank. It would receive ₹319 crore, followed by Bank of Baroda, at ₹262 crore. Among other lenders, Life Insurance Corp would receive ₹184 crore, Canara Bank ₹150 crore and Punjab & Sind Bank ₹138 crore. Lenders that signed the ICA need to ink a consent agreement stating that they will reverse the settlement amount in case of any adverse order from the adjudicating authority.

In June 2021, Authum emerged as the winning bidder for RHFL offering Rs 2,683.23 crore to lenders and NCD holders. However, this offer did not include Rs 200 crore overdue of the SP group entity.

Presently, Authum will distribute Rs 1,565.7 crore among creditors that sign the consent agreement by the month end.

A sum of Rs 223 crore is allocated for retail bondholders having up to Rs 5 lakhs of bonds, while a sum of Rs 896 crore is set aside for non-ICA lenders. Reliance Home Finance has a total overdue of Rs 11,541 crore.

This is the second Anil Ambani company after Reliance Commercial Finance to be acquired by Authum Investment. The parent company, Reliance Capital, is undergoing insolvency proceedings, with the Hinduja Group and Torrent Investment outbidding each other to buy the core investment company.

Last week, Hinduja gave an improved offer of Rs 9,400 crore a day after the auction ended as against Rs 8,640 crore offered by Torrent Investment at the auction held on Wednesday.

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