Reliance Capital had pledged the shares in its unit RGI as security against funds raised by group companies through the issue of non-convertible debentures in FY19.
Trusteeship, custodian of the RGI shares, says it doesn’t have permission from the debenture holders to release the pledged shares — representing a 37% stake in the insurance unit — according to the people cited above.
Fully owned by Reliance Capital, part of the Anil Ambani-led Reliance Group, RGI is profitable and could be worth Rs 6,000 crore, according to analysts.
It’s described as the crown jewel of Reliance Capital’s available assets that lenders have recourse to under the insolvency process. The other valued asset is Reliance Capital’s 51% stake in Reliance Nippon Life Insurance. The Reliance Capital group of companies had borrowed from Credit Suisse and Asset Management by selling non-convertible debentures backed by the RGI stock in FY19. IDBI Trusteeship and Reliance Capital’s administrator Nageswar Rao Y didn’t respond to ET’s queries.
The administrator is likely to seek legal recourse to get the encumbered shares back into the pool of assets that are part of the Reliance Capital insolvency proceedings, said the people cited above.
“The insolvency law is clear that creditors have to forgo their individual rights such as encumbrances created in their favour once insolvency proceedings commence,” said a legal expert aware of the matter on condition of anonymity. “These have to be part of the larger pool of assets for the benefit of all the creditors.”