Reliance Capital and Reliance Naval and Engineering restricted from trading on account of IRP proceedings

Shares of Reliance Capital Limited (RELCAPITAL) and Reliance Naval and Engineering Limited (RNAVAL) are going through the insolvency resolution process (IRP) as per the Insolvency and Bankruptcy code. Due to this, the exchanges have moved these stocks under the additional surveillance measure (ASM) mechanism under which stocks trade only once per week, on the first trading day of the week.

How does this affect me as a shareholder?

Since these shares are traded only once per week (the first trading day of the week), if you’re holding shares of Reliance Capital and or Reliance Naval and Engineering, you will not be able to see these holdings on Kite on days they are not traded. However, you will be able to see these holdings on Console.

On the day these shares are traded, you will be able to see them on Kite holdings and will be able to trade in them.

What is the insolvency resolution process (IRP) process?

IRP stands for Corporate Insolvency resolution process. It is a process under the Act Insolvency and Bankruptcy Code, 2016. (The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India).

In case a corporate debtor makes a default in repayment of dues of the creditors, the financial creditor/s, has the power to start the insolvency resolution process. In order to initiate the resolution process, an application has to be made to National Company Law Tribunal (NCLT). The claims of the Creditors (i.e company assets) shall be frozen for a period of six months on admission of application by NCLT. During this time, the NCLT shall listen to the options to revive and decide the future course of action, either debt resolution, corporate restructuring or liquidation. This process happens in stages.