NCLT Approved the resolution plan of Rs 9,650 crore presented by Hinduja Group company IndusInd International Holdings for taking control of Reliance Capital. In this, lenders will have to bear the loss of 63 percent of the outstanding. The Mumbai bench of NCLT approved the debt resolution plan for Reliance Capital presented by IndusInd International Holdings Limited in June 2023. IIHL had made this bid in the second round of auction under the insolvency process for the sale of debt-laden Reliance Capital. Under the debt resolution plan approved by NCLT, the company’s creditors will have to face a huge loss of 63 percent i.e. ‘haircut’.
The company’s board was dismissed in November, 2021
Out of the total claims of Rs 38,526.42 crore made against the company, the tribunal has accepted only the claims of Rs 26,086.75 crore. IIHL, which was declared the winner in the bidding process, has agreed to pay only 37 percent of the accepted claims i.e. Rs 9,661 crore. This means lenders will not get 63 percent of their outstanding claims. In November 2021, the Reserve Bank of India had dismissed the board of directors of Anil Dhirubhai Ambani group company Reliance Capital due to administrative issues and payment defaults. At that time the central bank had appointed Nageswara Rao Y as administrator, inviting bids in February 2022 to acquire the company.
Ownership rights will come to IIHL
The bench of NCLT’s Mumbai bench comprising Justice Virendra Singh G Bisht and technical member Prabhat Kumar, while approving the debt resolution plan, said that this plan has been approved by 99.60 percent of the lenders. And it follows all the conditions prescribed in the Insolvency and Bankruptcy Code. Upon completion of the resolution plan, the majority stake of Reliance Capital will come to IIHL and the listing of Reliance Capital on the stock exchanges will end. NCLT rejected the objection of the Income Tax Commissioner and allowed adjustment of losses of Rs 13,523 crore of RCAP.
The loan was worth Rs 38,000 crore
NCLT has pegged the average fair value of RCap at Rs 16,696 crore and average liquidation value at Rs 13,158.46 crore. Secured creditors will get full payment of Rs 481.88 crore. While about 96 per cent of the total claims of Rs 15,403.78 crore made by other creditors and stakeholders have been rejected. Reliance Capital had a debt of over Rs 38,000 crore and four applicants had initially bid with resolution plans. However, the committee of creditors rejected them due to low bid price and conducted a second round of auction in which IIHL and Torrent Investments participated.
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