In Brief
Reliance Commercial Finance Limited defaulted on non-convertible debentures held by various investors. Lenders formed an inter-creditor agreement and approved a resolution plan for restructuring the debt. The Supreme Court clarified that the SEBI Circular on debenture trustee procedures, issued in October 2020, applies retroactively to defaults occurring before its issuance. When debenture holders participate in a resolution plan with lenders, they must comply with SEBI's requirement of consent at the ISIN level (75% by value and 60% by number). However, exercising its power under Article 142, the Court allowed the existing plan to proceed because retail debenture holders were receiving superior recovery (100% on exposures up to Rs. 10 lakhs). Dissenting debenture holders must be given the option to either accept the plan or pursue alternative remedies outside it.
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