E-PaperRCap lenders say they don’t intend to liquidate the company but want fair compensation
- The lenders said IIHL has yet to commit funds to the plan though it has been more than 12 months since it was submitted, more than 11 months since the CoC approved it, and four months since NCLT approved it.
Reliance Capital’s lenders don’t intend to liquidate the company and simply want fair compensation and certainty that IndusInd International Holdings Ltd’s (IIHL’s) resolution plan will be implemented promptly, the committee of creditors (CoC) said in filings with the bankruptcy tribunal on Monday. RCap administrator Nageswara Rao Y also made certain submissions before the tribunal. Mint has reviewed copies of both filings.
According to the lenders, IIHL has yet to commit funds to the plan though it has been more than 12 months since it was submitted, more than 11 months since the CoC approved it, and four months since NCLT approved it. “Despite that, IIHL has failed to demonstrate financial tie-up (of) both debt and equity to the satisfaction of CoC,” read the lenders’ submission.
The filings were in response to IIHL’s application seeking a 90-day extension to implement its resolution plan. The Hinduja Group-owned firm received the NCLT’s approval for its ₹9,861-crore plan in February, and the deadline to implement it was 27 May.
The plan involves ₹7,300 crore in borrowing from lenders, a ₹2,500-crore equity infusion by IndusInd International from outside India, and another equity infusion of ₹250 crore by Cyqure India, a Hinduja Group associate.
The lenders said on Monday, “IIHL has been saving on financing costs on the debt of ₹7,300 crore which it was required to bring by 27 May, while gaining returns on equity of ₹2,750 crore which is deployed or invested in other business by IIHL and would be yielding greater returns.”
Also read: IndusInd proposes new corp structure for RCap resolution plan, leaving lenders in the lurch
The lenders also said IIHL failed to disclose the internal rate of return (IRR), which was only revealed during the NCLT hearing. IRR is a metric used in financial analysis to estimate the profitability of potential investments.
DPIIT approval mess
The lenders had previously said they would approve the extension if they were compensated with 12% interest on the value of the ₹9,861-crore resolution plan. IIHL had said it was seeking an extension as it was awaiting approval from the Department for Promotion of Industry and Internal Trade (DPIIT).
However, the lenders pointed out that IIHL wasn’t ready to implement the resolution plan on 27 May in any case. Also, the delay in applying for DPIIT approval was also based on a unilateral mistake of law by IIHL, the lenders said on Tuesday. They added that IIHL applied for DPIIT approval directly, without the consent of the CoC.
“The CoC is not in the business of running the operations of the corporate debtor,” lenders said in their submissions. “This also does not form part of the CoC approval items under Section 28 of the IBC. Under the resolution plan itself, clearly the obligation to obtain approvals is of the resolution applicant and not the COC.”
Emails sent to IIHL and the RCap administrator remained unanswered.
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