The Committee of Creditors (COC) of Reliance Capital (RCap) has opened two escrow accounts with Yes Bank for the Hinduja Group to deposit an initial equity contribution of Rs 2750 crores for the acquisition deal as per the directions of National Company Law Tribunal (NCLT), sources told Businessworld. One account, to deposit Rs 250 crore has been opened with the Worli, Mumbai branch of Yes Bank and another offshore account, for the deposit of Rs 2500 crores, has been opened at GIFT City in Gujarat, the sources said. Hinduja Group entities will be declared as defaulters if they fail to deposit the money in the Vistara designated escrow account by July 31 as per NCLT order. In October 2023, Hinduja Group entity Indusind International Holdings (IIHL) had won the Rs 9850 crore deal to acquire RCAP in NCLT and since then the group had missed multiple deadlines and failed to bring money (as low as Rs 250 crores) on the table.
On July 23, the NCLT had granted time to the the Hinduja Group only up to August 10, to complete the deal and sought initial equity amount by July 31. If Hinduja Group is unable to bring the money it will also lose its initial deposit of around Rs 500 crores that it had made as a commitment for the deal when its group entity was approved as the successful bidder for RCAP in NCLT.
It has been nearly two years that Hinduja Group has been trying to acquire RCAP. The NCLT had approved the Resolution Application (RA) by Indusind International Holdings Ltd (IIHL), a holding company of the Ashok Hinduja Group, in October 2023. Since then, the Hinduja Group has been unsuccessful in bringing just Rs 2750 crores on the table in the total deal worth Rs 9850 crores. Considering that it has missed several deadlines in the past, it seems difficult for the group to put Rs 2750 crores in escrow in just seven days. In case, Hinduja manages to bring Rs 2750 crores in these seven days, the NCLT has directed it to implement the Resolution Plan by August 10, which means it will have to bring the further contribution of Rs 7300 crores (debt money) in 15-18 days from today.
In an order on July 23, the NCLT said they would permit IIHL to implement the Resolution Plan by August 10 on the following conditions: Which is to deposit Rs 250 crores in an escrow in India and Rs 2500 crores in escrow overseas.
"The Applicant (IIHL) shall deposit Rs. 250 crores towards domestic equity in the escrow account in India designated by the Committee of Creditors (of RCAP). The Applicant shall deposit Rs. 2500 crores in an offshore escrow account designated by the Committee of Creditors as contribution towards the equity to be invested in the Corporate Debtor (RCAP), and this amount shall forthwith be brought in India upon receipt of approval from Central Government for bringing in foreign equity. The Applicant shall place all the above on record under an affidavit on or before 31st July, 2024," the NCLT bench said.
The NCLT has further asked IIHL to submit to the Monitoring Committee (Of RCAP) copies of the binding executed Term Sheets for the loan amount of Rs. 7300 crore and such loan should be disbursed to the credit of designated account before the extended date subject to foreign equity component approval in place, which has to be placed on record under an affidavit on or before July 31, 2024.
The NCLT said that the COC was also entitled to any cash recovery arising during the extended period in RCAP net of CoC entitlement amount. "In the event the Applicant fails to implement the resolution plan within the extended period, the same shall be treated as an event of default and the Committee of Creditors shall be entitled to take all requisite steps against the Applicant.
After having won approval from NCLT IIHL has missed two deadlines for payment to RCap creditors. The last deadline of 90 days ended on 27 May. Even after around 60 days after the 27 May deadline, the Hinduja Group has not been able to put the minimum equity share on the table.
