Funds not deposited by IIHL for bankrupt Reliance Capital buy: CoC

Entire funding plan submitted to NCLT, says Hinduja group

The committee of creditors (CoC) of the bankrupt Reliance Capital (RCap) has written to Indusind International Holding (IIHL), a Mauritius-based Hinduja group entity, saying that it (IIHL) has failed to deposit Rs 2,750 crore as equity contribution for the acquisition of RCap before the July 31 deadline.

But the Hinduja group denied that it defaulted on its payment.  IIHL and other Hinduja group entities had won the race to acquire RCap, a financial services firm, in December 2022 but the acquisition is mired in litigation. The National Company Law Tribunal (NCLT) had asked IIHL to deposit the equity contribution in an escrow account by July 31 while extending the date to complete the entire process by August 10.

 

In a statement, IIHL said there is no default by it under the resolution plan.

IIHL is in compliance with its obligations under the resolution plan as approved by the NCLT, it said.

“IIHL has deposited the requisite capital infusion amount of Rs 2,750 crore in its bank accounts towards its equity contribution. An affidavit to this effect, along with bank certificates, has been filed with the NCLT on July 31, 2024. A copy of this has been served to the CoC and the administrator. The affidavit also clarifies that IIHL has obtained binding commitment letters and executed term sheets for Rs 7,300 crore,” the IIHL statement said.

“It is pertinent to note that the original order, approving the resolution plan dated February 27, 2024, categorically requires the CoC and the administrator to complete certain actions and conditions for which a meeting was held with them on July 29, 2024. These actions and compliances as required are yet to be fulfilled. This resulted in IIHL approaching the NCLT by filing an interim application seeking specific directions and also modifications to their order of July 23, 2024. Pending the hearing of the filed application and subject to the modification of the order, IIHL has, in compliance with its obligations under the resolution plan, deposited the full equity contribution of Rs 2,750 crore," the statement said.

When contacted, a Hinduja source said the entire funding plan is in place and has already been submitted to the NCLT in a sealed envelope to prevent leakage of information.

According to the court filing, IIHL has signed binding agreements with Barclays Bank and 360 One for loans worth Rs 7,300 crore. In its letter dated August 1, Vistra Ltd (the designated entity of CoC), said the CoC would like to highlight that in terms of the order of the NCLT, IIHL was to deposit Rs 250 crore towards domestic equity in the escrow account in India.

And, another tranche of Rs 2,500 crore was to be deposited in an offshore escrow account designated by the CoC as contribution towards equity to be invested in RCap.

Besides, IIHL was to submit to the monitoring committee copies of the binding term sheets for the loan of Rs 7,300 crore.

“However, the CoC notes that IIHL has not complied with the directions of the NCLT. The monies have not been deposited in the CoC designated accounts as on July 31 and details of the CoC accounts and fund flow therefrom had been communicated to you by the administrator on July 26 and July 27,” the letter said. This paper has reviewed the CoC letter.

The letter said IIHL was also allowed the option to communicate details of the accounts which may be designated as CoC designated accounts on July 26 and July 30.

“However, no such details were provided by you to the CoC and the executed term sheets have also not been provided to the monitoring committee,” the letter said.

“In view of the default of the NCLT order by you, the rights and remedies of the CoC, in law and equity as well as under the request for resolution plan, are expressly reserved. No delay, indulgence, act or inaction on the part of CoC shall be construed as a waiver of the aforementioned rights and remedies, unless expressly communicated in writing by the CoC,” the letter said.

Story so far
 

IIHL and other Hinduja group entities had won the race to acquire Reliance Capital in Dec 2022
 

NCLT had asked IIHL to deposit the equity contribution in an escrow account by July 31 while extending the date to complete the entire process by Aug 10
 

Hinduja source said the entire funding plan is in place and has already been submitted to the NCLT in a sealed envelope
 

As per the court filing, IIHL has signed binding agreements with Barclays Bank and 360 One for loans worth Rs 7,300 crore