RCap buy: NCLT asks IIHL to deposit funds in lenders’ accounts in 48 hours
In a setback to the Hindujas, the National Company Law Tribunal (NCLT) has directed IndusInd International Holdings (IIHL), a Hinduja group entity, to transfer Rs 2,750 crore into the accounts of lenders within 48 hours.
IIHL was the highest bidder for Reliance Capital, a bankrupt financial services firm, with an offer of Rs 9,561 crore. As per the NCLT order dated July 23, IIHL had to pay the equity component of Rs 2,750 crore of the offer by July 31, 2024. But IIHL did not pay the lenders, saying it wants some pre-conditions of the escrow account to be met by the lenders.
The NCLT in its order today also clarified that the interest income on the money in the escrow accounts will accrue to the lenders.
The NCLT directed IIHL to disclose the term sheet for Rs 7,300 crore fund-raising through debt to the monitoring committee of the lenders.
The NCLT was hearing petitions filed by both IIHL and the Administrator of Reliance Capital. As per the Administrator, the Hinduja group has not deposited funds to acquire Reliance Capital (RCap) in the designated accounts of the lenders despite making the highest offer, which is a “contempt of the court”.
The legal tussle between the Hinduja group and the lenders has led to a delay in the resolution of the RCap acquisition, which was sent to the bankruptcy court in December 2021 after it failed to repay debt worth Rs 25,000 crore.
In a statement on Sunday, IIHL had said the NCLT order required IIHL to deposit monies in an “escrow account designated by the CoC” and not “operated” or “controlled” by the CoC. “Despite this, the CoC communicated through the Administrator, details of the bank account of Vistra – operated and controlled by CoC – in complete defiance of the NCLT order. The CoC has also not provided any escrow arrangement terms and details to date. This left IIHL with no choice but to deposit monies in its own account,” it said.
IIHL had acquired the company in December 2023. After the highest bid made by IIHL, the debt resolution is mired in litigation at the NCLT with a separate petition pending in the Supreme Court.
The affidavit by the Administrator said that instead of depositing Rs 2,750 crore in the CoC’s designated escrow accounts in India and offshore, as mandated by the court, the company has deposited the money in its own accounts as well as in the promoters’ accounts.
First Published: Aug 08 2024 | 6:34 PM IST