Hinduja Group company's resolution plan for Reliance Capital approved by NCLT.

The National Company Law Tribunal (NCLT) has granted approval to the resolution plan proposed by IndusInd International Holdings Limited (IIHL), a subsidiary of Hinduja Group, for the restructuring of Reliance Capital, amounting to Rs 9,650 crore. This decision was made during a session held by the Mumbai bench of the NCLT, endorsing IIHL's plan which was submitted in June 2023 during the second round of bidding for Reliance Capital's debt restructuring. Although a detailed order on the matter is anticipated later in the day, the tribunal's approval signifies a significant step forward in resolving Reliance Capital's financial issues.

The backdrop to this development traces back to November 2021 when the Reserve Bank of India intervened by replacing Reliance Capital's board due to governance concerns and financial defaults within the Anil Dhirubhai Ambani Group. Following this intervention, Nageswara Rao Y was appointed as the administrator, who then initiated a bidding process in February 2022 to facilitate the company's takeover. With Reliance Capital grappling with debts exceeding Rs 40,000 crore, four initial applicants submitted resolution plans. However, the committee of creditors dismissed all proposals due to lower bid values, prompting a challenge mechanism.

In the subsequent stages, IIHL, along with Torrent Investments, emerged as participants in the challenge mechanism. Eventually, in June 2023, the Hinduja Group's subsidiary, IIHL, secured the committee's preference with its bid of Rs 9,661 crore in upfront cash. Additionally, Reliance Capital's existing cash reserves of Rs 500 crore are also slated to be directed towards lenders as part of the resolution process.

The approval of IIHL's resolution plan by the NCLT marks a crucial milestone in the efforts to address Reliance Capital's financial distress. It underscores the ongoing endeavors to stabilize the company's operations and fulfill its obligations to creditors amidst the broader restructuring landscape within the Indian corporate sector.