Reliance Naval lenders asked not to vote on resolution plan

The Ahmedabad National Company Law Tribunal (NCLT) has restrained the committee of creditors of bankrupt Reliance Naval and Engineering (RNEL), an Anil Dhirubhai Ambani Group company, from voting on any resolution plan until it passes an order on whether Citi Securities and Financial Services should be a part of the committee of creditors.
Resolution professional (RP) Sudip Bhattacharya, backed by Duff and Phelps, has now cancelled voting on a plan scheduled for December 21.

The RP has not yet admitted Citi Securities' Rs 2,538-crore claim on the bankrupt shipbuilding company.

He has stated that the claim emanates from Rs 2,538 crore assigned by Reliance Infrastructure, a part of ADAG, to RNEL and hence it has been marked for further verifications.

Only those financial creditors whose claims are admitted by the RP can vote on the resolution plan as per Insolvency and Bankruptcy Board of India's rules.

NCLT in its order on Wednesday (December 15) directed the RP to "verify or re-verify" Citi Securities' claim and directed the unsecured lender to provide supporting documents to the RP.

The tribunal is scheduled to hear the matter on December 20. If the tribunal orders to include entire claims of Citi Securities, it would receive the highest share of proceeds from the winning bidder with nearly 17% share of debt.

Consequently, it would sharply reduce recoveries of other creditors such as State Bank of India and Union Bank of India - the two largest creditors as of now.

Citi Securities is also the largest verified debtholder of E Complex, a part of ADAG, now facing bankruptcy proceedings. E Complex owns the land on which the construction and engineering work for Reliance Naval is undertaken.

Citi Securities is an affiliate of VB Desai Financial Services, a listed company that focuses on investment banking and corporate advisory.

Creditors of Reliance Naval have received binding bids from Hazel Mercantile and Jindal Steel & Power.

The offer from Hezel Merchantile, a part of Groupe Veritas, is better than JSPL, a part of Naveen Jindal group company, one of the lenders said while adding that both the bidders have offered staggered payments.

The RP has admitted Rs 12,429 crore secured financial creditors' claims. It has also received Rs 31,371-crore claims from unsecured financial creditors including disputed claims from Citi Securities.