The ICA lenders of Reliance Commercial Finance Ltd. (RCFL) are meeting on Tuesday to consider the recent Supreme Court order dated August 30 that had given the go-ahead for the Resolution Plan of RCFL.
The 18 lenders led by the Bank of Baroda (BOB) will also be discussing the One Time Settlement (OTS) proposal by DB Realty for its Rs 633 crore default in RCFL.
According to the banking sources, the OTS proposal of DB Realty is likely to be rejected by the lenders as they are offering less than 50 per cent of the total outstanding dues of Rs 633 crore.
Moreover, both the promoters, Vinod Goenka and Shahid Balwa, are also involved in multiple cases with CBI and ED. Therefore, the lenders are wary of accepting any One Time Settlement Offer from the promoters.
DB Realty is offering to repay only Rs 306 crore against the total default of Rs 633 crore, resulting in a hair cut of 52 per cent to the lenders.
Out of this Rs 306 crore, the DB Realty will pay less than 10 per cent, i.e. Rs. 25 crore, as an upfront payment, and the balance will be paid after 90 days.
However, the lenders are more concerned about the fact that the promoters of DB Realty, Balwa and Goenka, are co-borrowers and personal guarantors for the loans (of Rs 633 crore) that they had taken from RCFL.
A banker involved in the process revealed that the entire DB realty exposure of Rs 633 crore with RCFL is fully secured against the assets of DB Realty.
The value of collateral available with RCFL is over Rs 3,000 crore as against the total exposure of Rs 638 crore, giving a cover of over 4 times. Therefore, full recovery can be ensured by initiating recovery proceedings against DB Realty and its promoters, including invoking their personal guarantee.
The banker also said that DB Realty has recently raised Rs 1,500 crore by way of preferential issue, and as per company's own declaration, these funds are to be utilised for the repayment of debt.
Pursuant to this fund raising, the market capitalisation of DB Realty has risen to over Rs 1,700 crore, and the promoters hold 68.89 per cent of the shareholding, which values to over Rs 1,170 crore.
Lenders believe that DB Group has adequate assets and resources to clear its dues in entirety.
The DB Realty and two other group entities i.e. Goregaon Hotel and Bamboo Hotel had availed Rs 633 crore worth of loans from RCFL between 2016 to 2018, and eventually defaulted on the repayment.
These loans were classified as NPA by the RCFL between April 2019 to December 2020.
RCFL had initiated insolvency proceedings against DB Realty, Goregaon Hotel and Bamboo Hotel, in January 2020. These proceeding are still pending before the NCLT Mumbai.
In the meantime, DB Realty has made an OTS proposal to the lenders under which it has offered to repay only Rs 306 crore against the total default of Rs 633 crore.
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