Lenders move NCLT against 90-day extension for IIHL to complete RCap resolution

Mumbai: Lenders to a bankrupt Reliance Capital have filed an affidavit before the National Company Law Tribunal (NCLT) opposing the 90-day extension sought by the Hinduja group-owned IndusInd International Holdings Ltd (IIHL) to implement its resolution plan.

In a recent affidavit filed before the bankruptcy tribunal, the committee of creditors (CoC) cited a slew of concerns. These included delay in implementation of the resolution plan; IIHL’s inability to get the necessary regulatory approvals; last-minute changes in transaction structures; and uncertainty over IIHL’s ability to tie-up funds for the resolution plan.

Mint has seen a copy of the affidavit.

Also read | IIHL cannot annul Esops of Reliance General: Law firm

In February, the NCLT had approved IIHL’s resolution plan worth ₹9,861 crore for turning around Reliance Capital. The approved plan was to be implemented by 27 May. The proposal includes ₹7,300 crore in the form of borrowing from lenders, ₹2,500 crore through equity infusion by IndusInd International from outside India, and another equity infusion of ₹250 crore by Cyqure India - a Hinduja Group associate.

Lenders Demand Deadline Conditions

Lenders have prayed before the NCLT to not allow extension of the implementation deadline unless IIHL reveals its tie-up of funds for the entire resolution amount, including equity and debt, and places the proposed equity component of ₹2,750 crore in an escrow account.

Following certain changes in IIHL’s proposed implementation structure, the lenders said IIHL has sought some additional regulatory approvals from the Reserve Bank of India (RBI), which were not envisaged in the plan.

Also read | Implementation of RCap resolution plan by 31 March deadline untenable: IIHL 

Pertinently, the CoC said in its affidavit that a significant amount of public funds is involved in this deal including debt from LIC, EPFO, banks, and retail bondholders, besides others. “Therefore, any extension beyond 27 May, should take into account a recompense to the lenders, otherwise it will lead to unjust enrichment of IIHL at the expense of public monies.” They added that due to the delay in the resolution process, the creditors mentioned above are incurring losses worth ₹40 crore every week.

Earlier, the monitoring committee had clarified that any extension would amount to default that would be waived off subject to internal approvals by the lenders and if IIHL paid an interest of 12% per year on the resolution amount of ₹9,681 crore till 30 June 2024.

The matter will be taken up on Tuesday.

Also read | RCap’s administrator moves NCLT for faster payments from Hinduja’s IIHL