Lenders of Reliance Capital (RCap) are pressing the Hinduja Group to expedite a cash payment of Rs 9,650 crore and finalise the resolution process by May 27, the deadline set for completion.
During a meeting, representatives of the five-member Committee of Creditors (CoC) engaged with officials from IndusInd International Holdings (IIHL), the entity through which the Hinduja Group submitted bids for RCap, according to reports. The CoC, comprising Vistra ITCL (India), IDBI Trusteeship Services, Asset Care & Reconstruction Enterprise, IndusInd Bank, and Mazson Builders and Developers, emphasized the implementation of the resolution plan under National Company Law Tribunal (NCLT) regulations.
IIHL, the bidder for RCap, is awaiting approvals from regulatory bodies including the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), and Insurance Regulatory and Development Authority of India (IRDAI) to proceed with the resolution process.
The resolution
In June 2023, lenders of RCap overwhelmingly approved IIHL’s resolution plan with 99.6% of total votes in favour. The plan, endorsed by NCLT, entails the cancellation of RCap’s entire share capital without any consideration. Subsequently, IIHL and its nominees will become the shareholders.
Under the proposed turnaround strategy, IIHL intends to sustain and expand RCap’s major business operations. IIHL also plans to reimburse Rs 200 crore infused by the CoC into RCap’s subsidiary, Reliance General Insurance Company.
However, IIHL’s plans are contingent upon securing approvals from key regulators. IRDAI, in particular, has raised queries regarding the corporate structure for transferring Reliance Capital’s insurance businesses to IIHL. Approval from RBI for the transfer is due to expire on May 17, having been granted for a six-month period starting November 17.
