Reliance Home Finance Enters Insolvency Process Over ₹7.81 Crore Default

Reliance Home Finance Limited (RHFL) has been admitted into the Corporate Insolvency Resolution Process (CIRP) by the National Company Law Tribunal (NCLT) Mumbai Bench, following a default of ₹7.81 crore. The insolvency proceedings were initiated under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Default and Debt Details

The NCLT order comes in response to an application filed by Invent Assets Securitisation & Reconstruction Private Limited, the financial creditor. The default amount includes ₹80.98 lakh in outstanding interest. The debt originated from an inter-corporate loan facility of ₹9.50 crore with a 15-month repayment period and 10% annual interest.

Loan Disbursement and Transfer

Initially, Reliance Commercial Finance Limited (RCFL) extended the loan to RHFL. Following a demerger approved by the NCLT, the lending business of RCFL was transferred to Authum Investment and Infrastructure Limited. Authum continued the loan facility, with total disbursements reaching ₹7.00 crore.

Default and Insolvency Proceedings

Despite multiple disbursements and a request from RHFL for a one-year extension, the company failed to repay the dues. The financial creditor issued a recall notice demanding immediate repayment. As RHFL failed to comply, this date was considered the date of default, leading to the insolvency application.

NCLT Order and Appointment of IRP

The NCLT has appointed Mr. Umesh Balaram Sonkar as the Interim Resolution Professional (IRP) to oversee the CIRP. The tribunal has declared a moratorium under Section 14 of the IBC, prohibiting the institution or continuation of suits, transfer of assets, or any recovery actions against RHFL.

Implications and Next Steps

1. The powers of RHFL's Board of Directors now stand suspended, with the IRP taking control of the company's management.
2. A public announcement will be made to invite claims from creditors.
3. The IRP is tasked with preserving the company's assets and managing its operations as a going concern.
4. The insolvency process will aim to find a resolution plan for the company within the stipulated timeframe.

This development marks a significant turn for Reliance Home Finance Limited, as it enters the corporate insolvency resolution process. The outcome of this process will be crucial for the company's future, its creditors, and stakeholders in the financial services sector.