Experts and legal advisors welcomed the National Company Law Tribunal’s (NCLT) decision to approve Hinduja Group firm IndusInd International Holdings’ Rs 9,650-crore resolution plan for Reliance Capital. They said that the approval underscored the effectiveness of the insolvency resolution framework in addressing complex debt restructuring scenarios.
Nilesh Tribhuvann, Founder & Managing Director, White & Brief, Advocates & Solicitors, said, “We welcome the decision of the NCLT to approve the resolution plan submitted by IndusInd International Holdings Limited (IIHL) for Reliance Capital. This approval marks a significant step towards resolving the financial challenges faced by Reliance Capital and brings clarity to its future trajectory. The approval of IIHL’s resolution plan underscores the effectiveness of the insolvency resolution framework in addressing complex debt restructuring scenarios. It reflects a collaborative effort between stakeholders to achieve a viable solution for all parties involved.”
Natasha Treasurywala, Partner, Desai & Diwanji, said, “This is a much-awaited step in Reliance Capital’s journey that has been fraught with a number of unanticipated setbacks over the last 2 years. It brings relief to a number of lenders and stakeholders who have been waiting for a resolution. It now remains to be seen how quickly the Hinduja Group can raise funds for the acquisition with the hope that it happens well before the end of this financial year.”
“The successful resolution of Reliance Capital’s debt issues is crucial for the company and the broader financial ecosystem. It instills confidence among investors and creditors while safeguarding the interests of employees and other stakeholders,” said Nilesh Tribhuvann.
The Mumbai bench of the NCLT approved the plan submitted by IIHL (IndusInd International Holdings Limited) in June 2023 in the second round of bidding for the debt-laden company. A detailed order in the matter is expected later in the day.
“As legal advisors, we commend the diligence and transparency demonstrated throughout the resolution process. Moving forward, we remain committed to supporting our clients and facilitating a smooth transition by the regulatory framework. We look forward to the detailed order from the NCLT and trust that it will provide further clarity on the resolution plan and its implementation. Overall, this development signals a positive outlook for the financial sector and reinforces the importance of a robust insolvency resolution mechanism in safeguarding the integrity of the corporate landscape,” added Nilesh Tribhuvann.
In November 2021, the Reserve Bank had superseded the board of the Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.
Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans, which were rejected by the committee of creditors for lower bid values and a challenge mechanism was initiated where IIHL and Torrent Investments participated.
The Hinduja Group firm was selected by the committee in June 2023, for its bid of Rs 9,661 crore upfront cash. Reliance Capital’s cash balance of an additional Rs 500 crore would also go to the lenders.