The National Company Law Tribunal (NCLT) in Mumbai granted approval on Tuesday for the proposal put forth by IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity, to acquire bankrupt Reliance Capital Ltd. This decision marks a significant milestone in the protracted acquisition process.
The tribunal had reserved its decision on the matter on January 11, with a detailed order still pending.
In a significant development, the National Company Law Tribunal (NCLT) has greenlit the acquisition proposal put forth by IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity, to take over the bankrupt Reliance Capital Ltd. This approval marks a crucial milestone in the prolonged acquisition process.
The NCLT had previously reserved its decision on the matter on January 11, and a detailed order is yet to be issued.
Last July, IIHL, the promoter of IndusInd Bank, had submitted a bid of ₹9,861 crore to acquire Reliance Capital, which was subsequently endorsed by the administrator. Notably, this bid garnered overwhelming support from creditors, with a resounding 99% majority voting in favor of the acquisition.
However, Hinduja found itself entangled in a legal dispute with Ahmedabad-based Torrent Investments concerning the submission of bids during the corporate insolvency resolution process (CIRP).
Torrent Investments emerged as the top bidder during Reliance Capital’s insolvency auction in December 2022, offering ₹8,640 crore. However, IIHL surpassed this bid with an offer exceeding ₹9,000 crore after the auction concluded. This higher bid prompted lenders to initiate a second auction or an extended challenge mechanism to ensure optimal recovery value for the insolvent firm.
Dissatisfied with the outcome, Torrent Investments moved the NCLT in January 2023, alleging that the second auction violated CIRP norms. The NCLT ruled in favor of Torrent, deeming the second auction improper.
However, lenders contested this decision at the National Company Law Appellate Tribunal in March 2023, which allowed the second auction to proceed, prioritizing the maximization of recovery value from Reliance Capital.
Subsequently, in August 2023, Torrent Investments approached the Supreme Court in an attempt to halt the NCLT from considering IIHL’s settlement plan. Despite this, the apex court declined to intervene in the NCLT proceedings.
In November 2021, the Reserve Bank of India took the decision to supersede the board of Reliance Capital due to payment defaults and significant governance concerns.
Reliance Capital, at the time, had a secured debt amounting to ₹16,000 crore, with admitted claims exceeding ₹23,666 crore.