RCAP Deal: 48 Hour Ultimatum To Hinduja Group To Deposit Rs 2750 Cr

After defaulting on the deal to acquire Reliance Capital (RCAP) as per the 23 July order of the NCLT (National Company Law Tribunal) Mumbai bench and a few more deadlines earlier, the Hinduja Group is now seeking yet another extension. The NCLT gave the group just 48 hours to deposit Rs 2750 crores, initial equity contribution, for its deal to acquire RCAP.

Earlier, the NCLT had asked Indusind International Holdings (IIHL), a Hinduja group entity, to deposit Rs 2750 crores in two escrow accounts opened and controlled by RCap's committee of creditors (COC) and submit binding term sheets for the rest Rs 7300 crores of debt money to the COC by July 31, which the group failed to do so. Instead, the Hinduja group entities claim to have deposited the money in their own bank accounts and filed an application with the NCLT seeking several modifications to its July 23 order. Now the lawyers appearing for the group have told the court that they were ready to deposit the money in two escrow accounts opened by the COC and wanted some extension of the July 31 deadline.

The counsel for Hinduja Group entity told NCLT that they were ready to transfer the amount of Rs 250 crores and Rs 2500 crore in an onshore and offshore CoC designated account respectively within 48 hours, and also tender the binding terms sheet in relation to debt component before Monitoring Committee by end of the day, subject to Monitoring Committee conforming with confidentiality of contents therein.

The NCLT further said that they were willing to tolerate certain delays with regard to fund transfer as per banking channels but wanted the Hinduja Group entities to give instructions for the same and submit the proof of it.

The next hearing on the matter is scheduled on coming Monday, when the Hinduja Group will have to present the proof of fund transfer to the NCLT.

The debt resolution process of RCAP has been severely delayed as IIHL missed multiple deadlines in the past one year to bring money on the table. After missing its May 27 deadline, IIHL had sought time till July 31 to bring just Rs 2750 crore on the table for the total deal worth Rs 10,000 crores. When it could not put the money in the escrow accounts as directed by the NCLT on July 23, IIHL filed a further application seeking modification of the NCLT order, which in effect could further extend the deadline without any money to the COC, the administrator says.

After IIHL defaulted on the third deadline on 27 May, the NCLT in July gave the entity time till August 10 to conclude the deal. The tribunal's only condition was that IIHL deposit the initial equity amount in the deal in the two escrow accounts by July 31 and present binding term sheets for the rest Rs 7300 crores that it had proposed to raise via debt. As per the administrator and the COC, Hinduja Group had defaulted since it did not follow the NLCT order and was now resorting to tactics.

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.