RCap lenders urge IIHL to secure regulatory approvals for acquisition

Though IIHL has sought approval from the Reserve Bank of India for the acquisition, approvals from the Insurance Regulatory and Development Authority of India (Irdai), the Securities and Exchange Board of India (Sebi), and the Competition Commission of India are still pending.

The Committee of Creditors (CoC) has also requested IIHL to ensure that, in line with its commitment, the resolution plan is implemented by 31 March, a letter issued by the lenders through law firm Luthra and Luthra showed.

“The CoC would like to highlight that following the discussions held between the representatives of IIHL including Mr. Ashok Hinduja (promoter of Hinduja group) in the meeting of the CoC held on December 13, 2023, IIHL had clarified and committed that IIHL would implement the Resolution Plan and make payments to the lenders in terms of the Resolution Plan before March 31, 2024,” the letter said.

The letter further stated that this understanding was once again, confirmed in the meeting of the CoC held on 22 December 2023 by the representatives of IIHL, who committed that IIHL would implement the Resolution Plan before March 31, 2024. However, the CoC notes that till date, certain documents and information in concerning regulatory approvals (IRDAI) continue to be pending at IIHL’s end, as also the implementation steps, despite multiple follow-ups.

Last week, the NCLT approved the proposal of IIHL to take over Reliance Capital under the Insolvency and Bankruptcy Code. It was reserved for orders on 11 January. The matter had been languishing before various courts for more than two years.

The tribunal in its order had held that the approval of the resolution plan shall not be construed as a waiver of any statutory obligations/liabilities of the company and shall be dealt with by the appropriate authorities in accordance with law.

In terms of the timeline, IIHL has 90 days to implement the resolution plan, However, as per the tribunal’s order, certain regulatory approvals from IRDAI, Sebi and CCI are pending and the implementation would come into effect only after these approvals are sought.

In July last year, the administrator accepted an offer of ₹9,650 crore from IIHL, the IndusInd Bank promoter, to buy Reliance Capital. The committee of creditors overwhelmingly supported the offer as well with 99% voting in favor.

However, Hinduja and Torrent Investments, based in Ahmedabad, were involved in a court dispute over the submission of bids under the corporate insolvency resolution procedure.

With an offer of ₹8,640 crore, Torrent Investments has taken the lead in the bidding at Reliance Capital’s December 2022 bankruptcy auction. 

To secure the best recovery value for the insolvent corporation, the lenders decided to hold a second auction or an extended challenge process after IIHL submitted a higher bid of more than ₹9,000 crore following the auction.

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 contested by the lenders at the National Company Law Appellate Tribunal in March 2023, which permitted the second auction to proceed, aiming to maximize the value recovered from Reliance Capital.

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Published: 05 Mar 2024, 06:03 PM IST