MUMBAI: Lenders led by IDBINSE -3.14 % Bank have turned down a resolution plan proposed by Reliance Naval & Engineering, which has not been servicing its more than Rs 9,000 crore of debt for several months now.
The lenders will now initiate bankruptcy proceedings against the company of the Anil Ambani-led RelianceNSE -2.19 % Group, said a bank executive involved in the matter. Lenders rejected the proposal for want of viability. With no proposal for an upfront equity investment or repayment of a part of the loan in default, lenders believe the firm is beyond resolution and liquidation may be the only option, the bank executive said.
“The RBI deadline to firm up a resolution plan for stressed companies has ended in early July and the proposal forwarded by Reliance Naval was not acceptable to lenders,” said the executive. “Reliance Naval was unwilling to make upfront payment and wanted banks to convert debt into equity as part of the resolution.”