RCap lenders can't take coercive action against IIHL, rules NCLT

IIHL seeks 90-day extension ahead of May 27 deadline

The National Company Law Tribunal (NCLT) has barred the lenders of bankrupt Reliance Capital (RCap) from taking any coercive action against IndusInd International Holdings (IIHL) -- the highest bidder -- and asked the firm to seek the remaining regulatory approvals for the acquisition.

IIHL, which is a Hinduja Group company, has to pay lenders by May 27 to conclude the deal, which was approved by NCLT in February this year.

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During the hearing on Wednesday, the NCLT also said that there should be no encashment of any bank guarantee of Rs 483 crore submitted by IIHL, as demanded by some of the committee of creditors (CoC) members.

The order was in response to IIHL’s application before the NCLT seeking a 90-day extension of the May 27 deadline due to several pending regulatory approvals and compliances. The CoC and the administrator of Reliance Capital opposed this request.

The NCLT then asked the respondents to file their responses by June 3 and the matter will be heard on June 6th.

IIHL and other Hinduja group entities had earlier indicated that they would make payments worth Rs 9,661 crore for the acquisition of bankrupt RCap only after getting all the legal and regulatory clearances, including from the Supreme Court, thus delaying the closure of the transaction.

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A source close to the development said as per the NCLT order dated February 27th, the payment for the acquisition was to be made within 90 days from the approval of the resolution plan by the NCLT and after receiving all legal, regulatory clearances.

As the matter is still pending in the Supreme Court following a petition filed by the Torrent group, which has opposed the second round of auction for RCap, the payment may not be made by May 27th, ie, within three months of the NCLT order.

The Supreme Court is expected to hear the Torrent petition in June but no date has been fixed as yet.