Lenders to indebted IIHL is allegedly using delaying tactics, according to Reliance Capital Ltd (RCAP), which is slowing down the implementation of the resolution plan. However, the Hinduja Group company has denied the claims, claiming it was acting in accordance with the law.
IndusInd International Holdings Ltd (IIHL), based in Mauritius, emerged as the victorious bidder for Reliance Capital.
“All allegations are completely false, baseless and are an attempt to malign and obstruct the resolution process,” sources with the IIHL stated.
“Every accusation is false and inaccurate. Given that IIHL has already paid Rs 2,750 crore with the CoC, there is simply no justification for the company to postpone the plan’s implementation,” the corporate sources stated.
Despite claims to the contrary, IIHL stated that it is in its best interests to end the implementation as soon as possible and acquire the business in order to quickly halt the daily value erosion and concentrate on expansion.
On February 27, 2024, the NCLT Mumbai accepted IIHL’s Rs 9,861-crore resolution plan for the financially troubled company.
Lenders allegedly expressed disapproval of IIHL’s decision to apply for authorisation from the Department of Industrial Policy and Promotion (DIPP).
It was not even one of the requirements that the NCLT specified when it approved the resolution plan on February 27, 2024.
Sources claim that even though IIHL filed the application with DIPP 90 days ago, the approval has not yet been granted.
According to IIHL sources, the adoption of DIPP was a component of the resolution plan that was approved by 99.96 percent of the Committee of Creditors (CoC) when it was placed to a vote.
Since some of IIHL’s stockholders reside in Hong Kong, a Chinese-controlled special administrative territory, DIPP permission is necessary.
Press Note 3 states that an entity from a country that shares a land border with India (China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan) or a citizen or permanent resident of any such country must pursue investment through the government approval route if they are the beneficial owner of an investment in India.
In compliance with the Insolvency and Bankruptcy Code (IBC), all current legal clearances must be obtained within any applicable time frame.
According to reports, the plan also stipulates that approvals must be obtained within a year (excluding CCI), so there is no need to worry about condition precedent or subsequent.
Earlier on August 12, the Reserve Bank of India (RBI) and DIPP were instructed by the National Company Law Tribunal (NCLT) to expedite the approval process in order to implement RCAP’s resolution plan by the Hinduja Group-backed IIHL.
In the meanwhile, IIHL has agreed to pay the full value of Rs 9,861 crore, contingent to regulatory approvals and the settlement of the outstanding GST component.
On September 19, 2024, NCLT will have its next hearing regarding the resolution plan for the RCAP.
IIHL sources added that while all other applications to the RBI, CCI, Sebi, and other authorities were continuously tracked, CoC never brought up the matter or submitted a statement of application to DIPP in any correspondence or meetings. They had every right to have brought it up, given their equal participation in the plan’s approval process throughout.
In November 2021, the Anil Dhirubhai Ambani Group company’s payment problems and governance difficulties led to the RBI taking over the Reliance Capital board.
Nageswara Rao Y, the administrator nominated by the central bank, requested offers to acquire the company in February 2022.
With more than Rs 40,000 crore in debt, Reliance Capital was the target of four bidders who first offered resolution proposals. Torrent Investments and IIHL took part in a challenge mechanism after the committee of creditors rejected all four plans due to lower bid values.