Companies
IndusInd revises RCap resolution plan, leaving lenders in the lurch
Summary
The Hinduja Group company had initially proposed implementing the resolution plan through two companies it owns. It now wants to include four new companies in the transaction.Hinduja Group’s IndusInd International Holdings Ltd has proposed changes to the corporate structure for implementing its resolution plan for Reliance Capital, which experts say could end up being a setback to the bankrupt firm’s lenders.
IndusInd has written to the Reserve Bank proposing the names of new companies to implement its ₹9,661-crore resolution plan for Reliance Capital, said two people aware of the development.
The new proposal comes just 20 days ahead of the deadline to implement its resolution plan under the Insolvency and Bankruptcy Code, 2016.
The National Company Law Tribunal had approved the resolution plan on 27 February, leaving IndusInd 90 days–until May 27–to implement it, as per the bankruptcy code. NCLT had asked IndusInd to implement the resolution plan by 31 March but the company had said that was untenable.
RBI approved IndusInd’s takeover of Reliance Capital in November.
“To include new companies in the deal, new applications for approvals from the (insurance regulator), Sebi, CCI (Competition Commission of India), and other regulatory agencies will need to be filed," said a lawyer aware of the matter.
“This is a setback for Reliance Capital’s lenders, who are represented by EPFO, LIC, and provident funds. They have been pressing IIHL to close the resolution plan by May 27 and to pay them a total of ₹9,661 crore."
The Insurance Regulatory and Development Authority of India (IRDAI) last month expressed reservations over IndusInd’s Reliance Capital acquisition, saying it was not in line with insurance regulations.
Four new companies
When seeking its approval for the resolution plan, the Hinduja Group company had proposed implementing the transaction through two companies it owns–IIHL BFSI (India) Ltd and Aasia Enterprises. All shares of Reliance Capital were to be transferred to IIHL BFSI and certain other assets to Aasia Enterprises.
In its proposed changes, IndusInd has included four new companies in the transaction–Cyqure India Pvt Ltd, Ecopolis Properties Pvt Ltd, Cyqurex Technologies Pvt Ltd, and IIHL BFSI Holding Ltd.
“While filing the application, Aasia had submitted detailed information about its partners and their profit-sharing ratios. However, now there has again been a proposal for change in the partners of Aasia and their profit-sharing ratio," said one of the people cited above, declining to be identified.
After the proposed changes, Aasia will have four partners whose profit-sharing will be in proportion to the fixed capital contribution, in line with the Limited Liability Partnership Act, 2008, at the end of each financial year, this person added.
Per IndusInd’s revised proposal, Cyqure India will hold a majority stake in Aasia Enterprises and act as its holding company. Its shareholders–Ashok Hinduja, Harsha Hinduja and Shom Hinduja–will be partners of Aasia.
Cyqurex Technologies and Ecopolis Properties will be 100% subsidiaries of Aasia Enterprises, while IIHL BFSI will be 100% owned by IndusInd.
