Reliance Capital Insolvency: Hinduja's IIHL Gets More Time To Complete Resolution Process

The National Company Law Tribunal bench of Mumbai on Tuesday gave Hinduja Group’s IndusInd International Holdings, or IIHL, until Aug. 10 to complete formalities to move with Reliance Capital’s insolvency proceedings. The bench has also asked to fulfil certain other conditions.

Firstly, IIHL must deposit Rs 250 crore into an Indian escrow account for domestic equity, as directed by the Committee of Creditors. Additionally, Rs 2,500 crore must be deposited into an offshore escrow account, also designated by the Committee of Creditors, which will then be transferred to India pending government approval for foreign equity. Furthermore, IIHL needs to provide copies of executed term sheets for a Rs 7,300 crore loan to the monitoring committee. This loan is to be disbursed to a specified account before a given extended date, contingent upon securing approval for the foreign equity component. Lastly, IIHL is required to submit an affidavit confirming compliance with these obligations by July 31.

As previously reported, in November 2021, due to governance issues and payment defaults, the Reserve Bank took over Reliance Capital and appointed Nageswara Rao Y as the administrator, who invited bids in February 2022.

Reliance Capital had a debt of over Rs 40,000 crore. Four bids were initially submitted, but the creditors rejected them for being too low. A new bidding process included IIHL and Torrent Investments. Eventually, the National Company Law Tribunal approved a Rs 9,650-crore plan to resolve Reliance Capital's debt.

However, citing compliance issues, IIHL sought a 90 day extension for completion of the resolution process, while the RBI appointed administrator, Nageswara Rao Y, argued that Hinduja Group's IndusInd International Holdings Ltd. should not receive an extra 90-day extension to implement its resolution plan for Reliance Capital Ltd. because it has not obtained the lenders' consent.