The Mumbai Bench of the National Company Law Tribunal (NCLT) is likely to pronounce an order on the approval of Hinduja Group firm IndusInd International Holdings Ltd's (IIHL) resolution plan for Reliance Capital on Tuesday (February 27).
IIHL had emerged as the highest bidder with an offer of ₹9,650 crore to take over debt-ridden Reliance Capital in the second round of auction concluded in April 2023.
Back on November 29, 2021, the Reserve Bank of India (RBI) superseded the board of Reliance Capital because of payment defaults and serious governance issues. The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.
Reliance Capital is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC). The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).
The central bank subsequently filed an application for initiation of CIRP against the company at the Mumbai Bench of the NCLT. In February last year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.
The CIRP against Reliance Capital was initiated by NCLT on November 29, 2021. The company has a consolidated debt of about ₹40,000 crore. An RFRP was issued on April 26, 2022, and four resolution applicants — Torrent Investments, IIHL, Cosmea Financial-Piramal Group and Oaktree Capital submitted their bids.
The Committee of Creditors (CoC) opined that the bid values that have been received are not acceptable and a challenge mechanism process was initiated. On December 21, 2022, a challenge mechanism process was conducted in which only two bidders, Torrent and IIHL, participated.
In June 2023, lenders of Reliance Capital voted in favour of a resolution plan submitted by the Hinduja Group firm, which had made the highest cash offer of ₹9,661 crore in the second round of bidding.
As much as 99% of votes were in favour of IIHL as the lenders expected to recover cash upfront of ₹9,661 crore from the Hinduja Group entity. Besides, a cash balance with Reliance Capital of over ₹500 crore would also go to the lenders.
All lenders are expected to receive about ₹10,200 crore for distribution against ₹16,000-crore principal secured debt, resulting in a 65% recovery for the lenders.
Shares of Reliance Capital Ltd ended at ₹11.79, down by ₹1.01, or 7.89%, on the BSE.
