NCLT Refuses to Stay Insolvency Proceedings Against Reliance
File image of Reliance Communication’s chairman Anil Ambani.
File image of Reliance Communication’s chairman Anil Ambani.(Photo: Reuters)

NCLT Refuses to Stay Insolvency Proceedings Against Reliance

Anil Ambani-promoted Reliance Naval and Engineering Ltd’s plea to stay insolvency proceedings initiated by state-run development bank IFCI Ltd has been rejected.

The National Company Law Tribunal’s Ahmedabad bench has given the Ambani company seven days to file an appeal against its order.

Reliance Naval is the second Anil Ambani group company after Reliance Communications Ltd to be dragged to the NCLT by lenders.

It had requested the tribunal to halt the proceedings on grounds that the Insolvency and Bankruptcy Code itself has been challenged before the Gujarat High Court. The NCLT didn’t grant any relief.

IFCI, a financial lender to Reliance Naval, initiated the insolvency proceedings last month against the company and its subsidiary Reliance Marine and Offshore Ltd for defaulting on its Rs 159-crore loan.

The company argued there were no merits in IFCI’s application since it was an unsecured creditor. The lender rejected the claim, saying the loan was secured by a guarantee extended by Reliance Naval.

It also said none of the creditors to the two companies had reached out to resolve the matter out of the NCLT. The tribunal will hear the petition against Reliance Naval and Reliance Marine on 11 January.

The Delhi-based development financial institution had lent approximately Rs 60 crore to Reliance Marine & Offshore Ltd, a subsidiary of Reliance Naval.

IFCI approached the National Company Law Tribunal after Reliance failed to service the loan. The insolvency petition was submitted mid- November.

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The company argued there were no merits in IFCI’s application since it was an unsecured creditor. The lender rejected the claim, saying the loan was secured by a guarantee extended by Reliance Naval. It also said none of the creditors to the two companies had reached out to resolve the matter out of the NCLT.

(The story has been published in arrangement with BloombergQuint).

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