Reliance Capital resolution: CoC warns of remedial action against IIHL

Lenders of debt-ridden Reliance Capital have cautioned the Hinduja Group arm, IndusInd International Holdings, of remedial action as it has failed to comply with the NCLT-imposed conditions, including a deposit of Rs 250 crore in an escrow account.

IndusInd International Holdings (IIHL), the successful bidder for Reliance Capital, has been given an extension till August 10 subject to certain conditions by NCLT, Mumbai.

As per the NCLT order dated July 23, the successful bidder had to comply with certain conditions by July 31, 2024.

These conditions included depositing the initial equity amount of Rs 250 crore in a domestic escrow account and Rs 2,500 crore in an offshore escrow account of the Committee of Creditors (CoC) by July 31.

IIHL failed to meet the deadline of July 31. On August 1, Vistra ITCL, the trusteeship acting on behalf of the CoC, wrote a letter to IIHL that it had defaulted on the NCLT order, now lenders reserve their rights and remedies as per the resolution plan submitted by it.

The monies have not been deposited in the CoC designated accounts as on July 31, 2024, the letter seen by PTI said.

"Details of the CoC accounts and fund flow therefrom had been communicated to you by the Administrator on July 26, 2024, and July 27, 2024," it said.

As per the order, IIHL also had to submit to the monitoring committee copies of the binding executed term sheets for the loan amount of Rs 7,300 crore.

The executed term sheets have also not been provided to the Monitoring Committee, the letter noted.

"In view of the default of the NCLT order by you, the rights and remedies of the CoC, in law and equity as well as under the request for resolution plan and documents in relation thereto, are expressly reserved. No delay, indulgence, act or inaction on the part of CoC shall be construed as a waiver of the aforementioned rights and remedies unless expressly communicated in writing by the CoC," it said.

After IIHL defaulted on the third deadline on May 27, the NCLT in July gave the entity time till August 10 to conclude the deal. The Hinduja Group firm cited pending regulatory approvals and compliance requirements as reasons for the extension.

The National Company Law Tribunal on February 27, 2024, approved Hinduja Group firm IndusInd International Holdings Ltd's Rs 9,650-crore resolution plan for Reliance Capital.

In November 2021, the Reserve Bank superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.

Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans. However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.