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Informist, Friday, Sep 13, 2024

 

NEW DELHI – The National Company Law Appellate Tribunal today issued a notice to IndusInd International Holdings Ltd on a petition by lenders to Reliance Capital Ltd's seeking interest on delayed payments by the former to acquire the debt-ridden company. The appellate tribunal also issued the notice to the monitoring committee and administrator of Reliance Capital. 

 

Lenders to Reliance Capital want IndusInd International to pay interest at an annual rate of 16.6% on the upfront payment of 96.60 bln rupees from May 27, the original resolution plan date, until its implementation on Aug 8.

 

Further, the lenders have sought forfeiture of IndusInd International's equity component of 27.50 bln rupees in case of default by the Hinduja Group-owned company. IndusInd International had deposited 27.50 bln rupees in an account designated by the committee-of-creditors. The appellate tribunal will hear the case next on Sep 30.

 

The Mumbai bench of the National Company Law Tribunal on Jul 23 granted an extension to IndusInd International over the implementation of the approved resolution plan for Reliance Capital by Aug 10. However, the tribunal put in place certain conditions while granting the extension to IndusInd International.

 

The tribunal asked IndusInd International to deposit 2.5 bln rupees towards domestic equity in an escrow account in India designated by the committee-of-creditors of Reliance Capital. It also asked IndusInd International to deposit 25 bln rupees in an offshore escrow account designated by the committee as a contribution towards the equity to be invested in Reliance Capital. This amount shall forthwith be brought to India upon receipt of approval from the central government for bringing in foreign equity, the tribunal added.

 

Challenging the tribunal's order and seeking its modification, the lenders moved the appellate tribunal. "The NCLT ought not to have granted an extension of time to IIHL (IndusInd International) for implementation of the resolution plan, without adequately compensating the CoC (committee-of-creditors) by grant of interest at a rate not less than the all-in financing cost (effective yield) payable to the financiers by IIHL," said the lenders. 

 

In February, the Mumbai bench of the tribunal had approved IndusInd International's resolution plan for Anil Ambani-promoted Reliance Capital. Initially, Torrent Investments Pvt Ltd emerged as the highest bidder for Reliance Capital with a resolution plan for 86.40 bln rupees. However, the committee-of-creditors decided to hold a second challenge mechanism, wherein Hinduja Group submitted a bid of more than 90 bln rupees in 2022.

 

Following multiple litigations in both the National Company Law Appellate Tribunal and the Supreme Court, the National Company Law Appellate Tribunal allowed the committee-of-creditors in March 2023 to continue with the challenge mechanism and call for bids.

 

In the last round of auction conducted for the debt-ridden company, IndusInd International was the sole bidder at 96.50 bln rupees, while Torrent Investments and others did not submit any bids. In June 2023, Reliance Capital's committee of creditors voted with a 99% majority for approval of the resolution plan.  End

 

Reported by Surya Tripathi

Edited by Aditya Sakorkar

 

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