(Source: Bloomberg)

IFCI Files Insolvency Proceedings Against Reliance Naval & Engineering At NCLT

Infrastructure lender IFCI Ltd. has initiated insolvency proceedings against Anil Ambani-led Reliance Naval & Engineering at the National Company Law Tribunal in Ahmedabad.

The Delhi-based development financial institution had lent approximately Rs 60 crore to Reliance Marine & Offshore Ltd., a subsidiary of Reliance Naval. IFCI approached the National Company Law Tribunal after Reliance failed to service the loan.

The insolvency petition was submitted mid- November, according to the official cited above. But the case is yet to be admitted. According to an Interim order by the tribunal dated Nov. 27, Reliance Naval must file objections to IFCI’s plea with a week. The case comes up for admission on Dec. 8.

There are no merits in the application filed by IFCI as it is a unsecured creditor, Reliance Naval said in an exchange notification today. “The 25 secured lenders of the company have also requested IFCI that the matter be resolved outside the NCLT. The company will take all necessary steps to safeguard the interests of all stakeholders,” the company added.

Reliance Naval is the second Anil Ambani group company after Reliance Communications Ltd. that’s been dragged to the NCLT by lenders. China Development Bank recently filed insolvency proceedings against Reliance Communications Ltd., BloombergQuint reported earlier. The financial creditor joined operational creditors Ericsson India Ltd and Manipal Tech Ltd. which earlier filed a petition seeking resolution under the new Insolvency and Bankruptcy Code.

Earlier this year, Reliance Naval & Engineering exited a corporate debt restructuring initiated by a consortium of lenders led by IDBI Bank. The exit involved longer maturity for loans worth Rs 6,800 crore which allowed Reliance Naval to participate in the strategic partnership programme of the Ministry of Defence.

Reliance Naval’s CDR involved refinancing of existing long term debt with door-to-door tenure of the loans extended to 18 years. It also involved conversion of Rs 650 crore of debt into equity at Rs 59.35 apiece.

The board in October approved raising up to Rs 1,500 crore via a rights issue.

Twenty of Reliance Naval’s 25 lenders participated in the CDR process. These include:

  • Bank of India
  • Bank of Maharashtra
  • Central Bank of India
  • Corporation Bank
  • Dena Bank
  • Export-Import Bank of India
  • IDBI Bank
  • IFCI (which lent to Reliance Marine & Offshore)
  • Jammu & Kashmir Bank
  • Karnataka Bank
  • Karur Vysya Bank
  • Life Insurance Corporation of India
  • Oriental Bank of Commerce
  • Punjab & Sind Bank
  • Punjab National Bank
  • State Bank of India
  • UCO Bank
  • Union Bank of India,
  • United Bank of India
  • Vijaya Bank

The five lenders which did not participate in CDR are as follows:

  • HDFC
  • Housing & Urban Development Corporation
  • India Infrastructure Finance Company (U.K.)
  • IL&FS Financial Services
  • Yes Bank

(Corrects an earlier version which said the loan to Reliance Marine & Offshore was worth Rs 150 crore.)