Insolvency proceedings against Reliance Capital begin; RBI files application

RBI on Thursday filed an application for the initiation of the Corporate Insolvency Resolution Process (CIRP) against Reliance Capital Ltd (RCL) under sections of Insolvency and Bankruptcy Code, 2016 at the Mumbai Bench of the National Company Law Tribunal.

New Delhi: The Reserve Bank on Thursday filed an application for the initiation of the Corporate Insolvency Resolution Process (CIRP) against Reliance Capital Ltd (RCL) under sections of Insolvency and Bankruptcy Code, 2016 at the Mumbai Bench of the National Company Law Tribunal.

"The Reserve Bank has filed an application for initiation of CIRP against Reliance Capital Ltd., under Section 227 read with clause (zk) of sub-section (2) of Section 239 of the Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 ("FSP Insolvency Rules") at the Mumbai Bench of the National Company Law Tribunal," RBI's official notification read.

The RBI, on Nov 29, superseded the board of directors of Reliance Capital Ltd in view of the defaults by the company in meeting various payment obligations to its creditors and "serious governance concerns which the Board has not been able to address effectively".

The RBI in a statement said that it has appointed Nageswar Rao, former Executive Director of Bank of Maharashtra as the Administrator of the company under Section 45-IE (2) of the RBI Act.

The central bank furthered that it would initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.