The committee of creditors (CoC) of bankrupt firm Reliance Capital has written to IndusInd International Holding (IIHL), a Hinduja group entity based in Mauritius, stating that it failed to deposit Rs 2,750 crore as equity contribution for the firm's acquisition by the deadline of July 31. However, the Hinduja group disputed that it had failed on its payments.
IIHL and other Hinduja group firms won the fight to acquire Reliance Capital, a financial services corporation, in December 2022, but the deal is entangled in litigation. The National Company Law Tribunal (NCLT) had instructed IIHL to deposit the equity contribution in an escrow account by July 31 while extending the deadline to finish the process by August 10. According to a statement, IIHL has not defaulted under the settlement plan. IIHL said it is in accordance with its commitments under the NCLT-approved resolution plan.
"IIHL has deposited the required capital infusion amount of Rs 2,750 crore in its bank accounts for the equity contribution. An affidavit to this effect, along with bank certificates, was submitted with the NCLT on July 31, 2024, and a copy was served to the creditors' committee and the administrator. The document also states that IIHL has secured binding commitment letters and executed term sheets totaling Rs 7,300 crore," according to the IIHL statement.
It is important to note that the original order approving the resolution plan, dated February 27, 2024, specifically required the committee of creditors and the administrator to complete certain actions and conditions for which a meeting was held with them on July 29, 2024. These mandatory actions and compliances have yet to be accomplished.
As a result, IIHL approached the NCLT with an interim application, seeking specific directions as well as revisions to their July 23, 2024 order. "Pending the hearing of the filed application and subject to the modification of the order, IIHL has deposited the full equity contribution of Rs 2,750 crore in accordance with its obligations under the resolution plan," the statement added.
In a letter dated August 1, Vistra Ltd (the CoC's designated entity) stated that in accordance with the NCLT's order, 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 committee of creditors as a contribution towards the equity investment in Reliance Capital.
Moreover, IIHL was to present to the monitoring committee copies of the binding term sheets for the loan of Rs 7,300 crore.However, the CoC adds that IIHL has not followed the .
The payments have not been placed in the COC. The cash had not been put in the CoC designated accounts as of July 31, and the administrator had conveyed details of the CoC accounts and fund flow to you on July 26 and July 27," the letter stated.
This paper has examined the CoC letter. According to the letter, IIHL was also given the option of communicating details about accounts that could be classified as CoC 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," according to the letter.
"In light of your default on the NCLT order, the CoC's rights and remedies 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 the CoC shall be interpreted as a waiver of the aforementioned rights and remedies, unless specifically expressed in writing by the CoC," the letter stated.
