NCLT approves Hinduja’s acquisition of bankrupt Reliance Capital

Mumbai: The National Company Law Tribunal (NCLT) on Tuesday approved the $Rs 9,650 crore resolution plan by IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity, to acquire bankrupt Reliance Capital Ltd, marking a major milestone in the protracted acquisition process.

The court had reserved its decision on the matter on January 11.

The resolution plan can be implemented within 90 days of its approval, according to the court order. Regulatory approvals from the Insurance Regulatory and Development Authority of India, the Securities and Exchange Board of India and the Competition Commission of India remain pending.

These approvals will be requested within one month, after which the 90-day implementation period begins, according to the order.

The NCLT bench headed by Justices Virendra Singh Bisht and Prabhat Kumar said, “The approval of the resolution plan shall not be construed as a waiver of any legal obligation/liability of the company and shall be processed by the appropriate authorities in accordance with law . "

Last July, IIHL, promoter of IndusInd Bank, had submitted an offer for $9,861 crore to acquire Reliance Capital, which was later approved by the administrator. The offer also received overwhelming support from creditors, with a 99% majority in favor.

However, Hinduja was embroiled in a legal battle with Ahmedabad-based Torrent Investments over submission of bids under the corporate insolvency resolution process (CIRP).

Torrent Investments had led the bidding during Reliance Capital's insolvency auction in December 2022 with an offer of $8,640 crores. However, the IIHL had proposed a higher offer of more than $9,000 crore after the auction, prompting lenders to initiate a second auction, or an expanded challenge mechanism, to ensure the best recovery value for the insolvent company.

An aggrieved Torrent had moved the NCLT in January 2023, which had sided with Torrent, ruling that the second auction violated CIRP norms.

This decision was challenged by the lenders before the National Company Law Appellate Tribunal in March 2023, allowing the second auction to take place, with the aim of maximizing the value recovered from Reliance Capital.

Next, in August 2023, Torrent Investment appealed to the Supreme Court in a bid to prevent the NCLT from considering the IIHL plan of arrangement. However, the top court refused to stay the NCLT proceedings.

In November 2021, the Reserve Bank of India replaced the board of directors of Reliance Capital due to defaults and serious governance issues.

Reliance Capital had secured debt of $16,000 crore, with admitted claims of more than $23,666 crores.

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Posted: Feb 27, 2024, 11:59 am IST

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