Reliance Capital to pay all lenders based on final plan value

Reliance Capital’s Committee of Creditors (CoC) has agreed to make payments to all lenders based on the ‘final plan value’, looking to avoid inter-creditor disputes. The final plan value of RCap’s assets, according to bids submitted by Hinduja Group, stands at `10,000 crore.

This is against the general practice of paying lenders who have agreed to the proposal (on a pro rata basis) based on the final plan value, and dissenters based on the liquidation value. In certain cases, dissenters have bargained for higher payouts.

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“In this case, the final plan value will be considered as the distribution value for all categories of lenders. This is a significant shift as it emphasises fairness and equitable treatment. Through this, the CoC aims to ensure a more transparent and unbiased process, fostering trust and confidence in the overall plan,” a source close to the development said.

“This will also help avoid any unnecessary inter-creditor disputes and faster completion of the resolution process,” the source said.

Lenders, including banks and other financial institutions, have supported the decision, which was taken at RCap’s CoC meeting on Monday. The CoC will meet again on Tuesday to ratify the decision, the source added.

Earlier, independent valuers RBSA and Duff & Phelps had finalised the liquidation value at ₹13,000 crore. Generally, the final plan value realised through bidding is higher than the liquidation value.

The distribution of funds under RCap’s resolution plan for priority secured creditors, secured creditors, unsecured creditors and operational creditors based on plan value was approved by almost 99% of votes polled. The final resolution plan will be put to vote in June.

The deadline to submit the resolution plan for the National Company Law Tribunal’s approval is July 15, and the COC is confident of meeting the deadline, sources said.

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The Hinduja Group, the sole bidder for RCap, had placed a total bid of ₹10,000 crore through group firm IndusInd International Holdings and had assured of upfront cash payment.

In March, Torrent Group, a bidder, had moved the Supreme Court against a National Company Law Tribunal order that permitted holding an extended auction for RCap. The case would be heard in August, after the summer vacation.