MUMBAI: The shipyard controlled by embattled Indian tycoon Anil Ambani is facing the prospect of bankruptcy after failing to get creditors’ approval for restructuring 70 billion rupees (US$970mil) of debt, people familiar with the matter said.
India’s bankruptcy tribunal would consider putting Reliance Naval & Engineering Ltd in bankruptcy today as no new repayment plan was submitted after lenders led by IDBI Bank Ltd rejected an earlier offer in July, the people said, asking not to be named as the information is not public.
The court can also defer the decision on bankruptcy.
Any court ruling favouring the banks would deal another blow to the tycoon’s stressed empire after his wireless carrier slipped into insolvency earlier this year.
The revival of the shipyard is crucial for the tycoon, who’s betting on potential cashflows from government defence contracts as Prime Minister Narendra Modi plans billions of dollars in spending on national security.
While IDBI had sought to move Reliance Naval into insolvency in September 2018, a decision was delayed after industry bodies representing power-generating companies, shipyards and sugar mills successfully challenged the RBI directive that required delinquent borrowers to be pushed into bankruptcy.
However, the risk of bankruptcy reemerged for the submarine maker after it failed to come up with a repayment plan even under Reserve Bank of India’s (RBI) relaxed norms.
Representatives for Reliance Naval and IDBI Bank didn’t respond to e-mails and phone calls seeking comments.
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. — Bloomberg
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