Authum completes takeover of debt-ridden Reliance Home Finance Ltd

Gurgaon based financial services company Authum Investments and Infrastructure has reportedly completed takeover of former Reliance Home Finance Ltd (RHFL), formerly owned by Anil Ambani. The acquisition of RHFL for 3351 crore Indian rupees is said to be one of the biggest resolution of a debt laden non banking finance company (NBFC) outside the bankruptcy courts.

According to a source familiar with the deal, Authum has transferred the necessary funds to its secured creditors. Following the transfer of funds the business transaction agreement has been signed by lenders to transfer the assets to Authum. Now all the assets of RHFL belongs to Authum Investment and Infrastructure.

Authum had in 2021 got green signal from Committee of Creditors to take over the debt ridden RHFL. But the resolution procedure got delayed when Securities and Exchange Board of India came ahead with objections in the  voting process which declared Authum as the winner. A lawsuit filed by Shapoorji Pallonji Group also stood as a backlog to complete the resolution plan.

RHFL owed more than 11500 crore rupees to lenders and creditors.  Committee of Creditors of RHFL consisted of 30 banks led by Bank of Baroda, 40 institutional investors including mutual funds and 20,000 retail investors. Retail investors also consisted of several high net worth individuals.

Few weeks ago, Supreme Court of India have final green light to Authum to go ahead with the implementation of resolution plan. The apex court also have option to dissenting holders that they can either accept the resolution plan or pursue other legal remedies to recover their money.

Reliance Home Finance Ltd (RHFL) had outstanding debts of over 11,500 crore Indian rupees owed to lenders and creditors. The Committee of Creditors overseeing RHFL included 30 banks led by the Bank of Baroda, 40 institutional investors such as mutual funds, and 20,000 retail investors, including several high net worth individuals.

Recently, the Supreme Court of India gave Authum the final approval to proceed with the implementation of its resolution plan. The court also provided the option for dissenting holders to either accept the resolution plan or pursue alternative legal remedies to recover their funds.

It should be noted that the delay in the proceedings has actually been beneficial for the lenders and creditors, as they have been able to recover more loans than initially anticipated. The amount recovered from loans in RHFL has now reached over Rs 3000 crore, up from Rs 1600 crore at the time the letter of intent was issued.

As a result of the increased final amount, secured creditors have now been able to recover approximately 29% of their dues, compared to the 26% initially projected in the plan. Authum has also set aside some funds to pay for the dissenting creditors and other liabilities of the company.