Piramal Capital launches bankruptcy proceedings against Reliance Power

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RNRL, which merged with Reliance Power in 2010, had secured the loan from Dewan Housing Finance Corporation (DHFL).

Piramal Capital and Housing Finance (PCHFL) has initiated bankruptcy proceedings against Reliance Power, controlled by Anil Ambani, and its subsidiary Reliance Natural Resources (RNRL), following a loan default of Rs 526 crore.

RNRL, which merged with Reliance Power in 2010, had secured the loan from Dewan Housing Finance Corporation (DHFL). Piramal Group, controlled by billionaire Ajay Piramal, had acquired DHFL for a total consideration of Rs 34,250 crore in 2021 and then merged it into PCHFL.

The PCHFL moved the bench of the National Company Law Tribunal, Mumbai under Section 7 (initiation of insolvency proceedings against the debtor company by a financial creditor) of the Insolvency and Bankruptcy Code (IBC ), said sources familiar with the development.

When contacted, a Reliance Power spokesperson declined, while a PCHFL spokesperson could not immediately be reached for comment.

According to Reliance Power’s website, the company has nearly 6,000 MW of operational power generation assets, including the 3,960 MW Sasan Ultra Mega Power project in Madhya Pradesh.

The Company’s projects under development include three coal projects, one gas project and twelve hydropower projects in Arunachal Pradesh, Himachal Pradesh and Uttarakhand.

A number of Anil Ambani Group companies, including Reliance Infratel (the tower arm of Reliance Communications), Reliance Telecom, Reliance Naval and Reliance Capital are currently subject to insolvency proceedings.

By September 2021, PCHFL had completed the acquisition of beleaguered DHFL, after which it now has access to over one million customers in 24 states and a network of 301 branches.

DHFL had gone bankrupt after owing more than Rs 90,000 crore to various lenders including banks, mutual funds and individual investors. In November 2019, the Reserve Bank of India had referred the mortgage lender to IBC, and later in January 2021, 94% of DHFL creditors voted in favor of a resolution plan submitted by Piramal Group.

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