Anil Ambani's Reliance Naval & Engineering Faces Prospect Of Insolvency As Banks Say No To Debt Restructuring Plan

Reliance Naval & Engineering Ltd, the submarine making shipyard owned by Anil Ambani faces the prospect of bankruptcy after it failed to get creditors’ approval to restructure Rs 70 billion of debt.

The National Company Law Tribunal (NCLT) is likely to consider putting the company in bankruptcy shortly since no new repayment plan was submitted after its lenders led by IDBI Bank, rejected an earlier offer in July. Yet, the NCLT could also defer the decision on bankruptcy.

Though the IDBI Bank had sought to move Reliance Naval into insolvency in September 2018, a decision was delayed after industry bodies successfully challenged an RBI directive which required delinquent borrowers to be pushed into bankruptcy.

However, the risk of bankruptcy re-emerged for the submarine maker after it failed to come up with a repayment plan even under the RBI’s relaxed norms.

The warship maker’s loan-recast plan that was rejected in July proposed banks converting part of the debt into equity after the RBI eased rules to provide lenders more discretion in dealing with soured debt, the people said.

The plan didn’t involve any upfront payments and proposed a transfer of banks’ non-fund exposures such as guarantees and letter of credits from Reliance Naval to another Ambani firm Reliance Infrastructure, the people said.