On Tuesday (27th February), the bankruptcy court in Mumbai approved a motion submitted by Reliance Capital’s administrator to accept the Anil Ambani-promoted company’s takeover by IndusInd International Holdings Ltd under the insolvency resolution process.
Experts and legal experts hailed the National Company Law Tribunal’s (NCLT) decision to allow Hinduja Group company IndusInd International Holdings’ Rs 9,650-crore Reliance Capital resolution plan. They stated that the approval demonstrated the efficiency of the insolvency resolution process in tackling complicated debt restructuring issues.
The NCLT panel, chaired by Justices Virendra Singh Bisht and Prabhat Kumar, stated, “The approval of the resolution plan shall not be construed as a waiver of the company’s statutory obligations/liabilities, which shall be dealt with by the appropriate authorities in accordance with law.”
Satisfaction of the stakeholders
Nilesh Tribhuvann, Founder & Managing Director of White & Brief, Advocates & Solicitors, stated, “We appreciate the NCLT’s decision to approve the resolution plan proposed by IndusInd International Holdings Limited (IIHL) for Reliance Capital. This decision is a crucial step towards addressing Reliance Capital’s financial issues and providing clarity about its future direction. The acceptance of IIHL’s resolution plan demonstrates the efficiency of the insolvency resolution system in tackling complicated debt restructuring issues. It represents a collaborative effort by stakeholders to find a feasible solution for all parties concerned.”
Natasha Treasurywala, Partner at Desai & Diwanji, stated, “This is a long-awaited phase in Reliance Capital’s journey, which has been riddled with a number of unexpected setbacks over the previous two years. It provides relief to several lenders and stakeholders who have been waiting for a resolution. It remains to be seen how soon the Hinduja Group can secure cash for the acquisition, with the expectation that it would occur before the end of the fiscal year.”
NCLT approving the proposal in June 2023
The Mumbai bench of the NCLT approved the proposal offered by IIHL (IndusInd International Holdings Limited) in June 2023 during the second round of bidding for the debt-laden corporation. A comprehensive order on the subject is likely later today.
“As legal consultants, we appreciate the effort and transparency shown throughout the settlement process. Moving ahead, we remain dedicated to assisting our clients and ensuring a seamless transition within the current framework. We look forward to the NCLT’s comprehensive order, which we believe will give more clarity on the resolution plan and its execution. Overall, this result bodes well for the banking industry and emphasises the significance of a strong bankruptcy resolution procedure in maintaining the integrity of the corporate environment,” Nilesh Tribhuvann said.
IIHL’s deal for Reliance capital in July
In July, IIHL, the promoter of IndusInd Bank, made a ₹9,861 crore deal to purchase Reliance Capital, which was later authorised by the administrator. The offer also garnered overwhelming approval from creditors, with 99% voting in favour. However, Hinduja was entangled in a court struggle with Ahmedabad-based Torrent Investments over offer submissions under the corporate insolvency resolution procedure (CIRP).
Scenarios in December 2022
In Reliance Capital’s December 2022 bankruptcy auction, Torrent Investments offered ₹8,640 crore, the highest price. After the auction, IIHL submitted a higher bid of over ₹9,000 crore, forcing the lenders to pursue a second auction or an extended challenge procedure, ensuring the greatest recovery value for the bankrupt corporation.
In November 2021, the Reserve Bank took over the board of Reliance Capital due to governance difficulties and payment defaults by the Anil Dhirubhai Ambani Group entity. The central bank appointed Nageswara Rao Y as administrator, and in February 2022, he requested bids to take over the firm.
Reliance Capital had a debt of more over Rs 40,000 crore, and four applicants first bid with resolution plans, which were rejected by the committee of creditors for lower offer values, prompting a challenge process in which IIHL and Torrent Investments took part.
The committee picked the Hinduja Group business in June 2023 for its proposal of Rs 9,661 crore in upfront payment. The lenders will also get Reliance Capital’s increased cash balance of Rs 500 crore.
Comments 1