Lenders of debt-ridden Reliance Capital Ltd (RCAP) are accusing IndusInd International Holdings Ltd (IIHL) of delaying the resolution process for the company’s debt issues. However, IIHL, part of the Hinduja Group, denies these claims, stating that they are following the proper procedures.
IIHL, based in Mauritius, was selected as the winning bidder to acquire Reliance Capital. Sources from IIHL say that the accusations are false and aimed at disrupting the resolution process. They argue that they have no reason to delay since they have already deposited ₹2,750 crore with the Committee of Creditors (CoC).
IIHL wants to finalize the process quickly to take control of the company and prevent further loss in value. On February 27, 2024, the National Company Law Tribunal (NCLT) in Mumbai approved IIHL’s ₹9,861-crore plan to resolve Reliance Capital’s debts.
Lenders allege that IIHL’s request for approval from the Department of Industrial Policy and Promotion (DIPP) was not originally required and is causing delays. It has been 90 days since IIHL submitted the application, and the approval is still pending.
IIHL explains that the DIPP approval was part of the resolution plan approved by 99.96% of the CoC. The approval is needed because some IIHL shareholders are residents of Hong Kong, which is considered a region with special conditions due to its association with China. According to India’s rules, any investment involving entities or individuals from countries sharing a land border with India (like China, Bangladesh, Pakistan, etc.) must go through a government approval process.
According to the Insolvency and Bankruptcy Code (IBC), all necessary approvals must be obtained within a set time, and the plan allows one year to secure these approvals, except for the Competition Commission of India (CCI).
On August 12, the NCLT instructed the Reserve Bank of India (RBI) and DIPP to speed up the approval process to implement Reliance Capital’s resolution plan by IIHL. IIHL has committed to paying the full amount of ₹9,861 crore, pending regulatory approvals and resolution of outstanding GST issues.
The next NCLT hearing regarding the resolution plan for Reliance Capital is scheduled for September 19, 2024.
IIHL also mentioned that the CoC never raised the issue of needing a DIPP application in any meetings or communications, although other regulatory applications were closely monitored.
In November 2021, the RBI replaced the board of Reliance Capital due to governance and payment problems. Nageswara Rao Y was appointed as the administrator to oversee the process and invited bids to take over the company in February 2022.
Reliance Capital has a debt exceeding ₹40,000 crore. Initially, four bidders proposed resolution plans, but the CoC rejected them due to low bid values. This led to a competitive challenge between IIHL and Torrent Investments.
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