Reliance Capital lenders to vote on Hinduja arm resolution plan from today

Reliance Capital’s lenders will start voting beginning Friday on the resolution plan submitted by a Hinduja Group entity that offers a recovery of a little over ₹10,000 crore, said two people aware of the development. This followed a two-day meeting by the lenders on the matter, they said.

The Hinduja Group’s Indusind International Holdings Ltd (IIHL) submitted a detailed resolution plan early this week that was presented to lenders on Wednesday. Torrent Investments, Piramal Capital and Oaktree Capital, the other bidders in the fray, did not submit detailed plans within the stipulated deadline, said the people cited above. Administrator Nageswara Rao Y has invited the committee of creditors to vote on IIHL’s plan from June 9. If over 66% of verified creditors vote in favour, the administrator will file an application with National Company Law Tribunal (NCLT) seeking its approval for the IIHL plan.

Separately, the Hinduja Group will seek Reserve Bank of India (RBI) consent for the plan. The RBI’s ‘fit and proper’ endorsement is needed for acquirers of financial services companies in such bankruptcy resolution exercises. On Wednesday, the administrator of Reliance Capital informed stock exchanges that only one resolution plan had been submitted. On Thursday, the administrator informed the exchanges that the lenders have decided to put the plan they received up for e-voting. In the last week of May, most lenders agreed on the equitable distribution of proceeds among assenting and dissenting creditors, a move aimed at discouraging negative voting on the plan.

Lenders expect a recovery of about ₹10,090 crore from the sale of the Anil Ambani-founded financial services company, below the liquidation value pegged at ₹12,500-13,000 crore. This would imply a recovery of 43% for lenders. The administrator has admitted ₹23,666 crore in claims from lenders.

The ₹10,090 crore includes a ₹9,660 crore final offer from the Hinduja Group entity and cash balance of ₹430 crore, which will be distributed to lenders.

However, the sale of Reliance Capital will be concluded only after the Supreme Court hears a suit filed by Torrent Investments over the auction being extended beyond the original deadline.

In the first auction on December 21, Torrent Investments made the highest offer of ₹8,640 crore, while the Hinduja Group entity offered ₹8,110 crore. However, within 24 hours, Hinduja made a revised, improved offer of ₹9,000 crore, a development contested by Torrent. The next auction was held on April 26.

The apex court is scheduled to hear the case in August. Life Insurance Corporation of India, Employees’ Provident Fund Organisation and JC Flowers Asset Reconstruction Co are the top three Reliance Capital debtholders. Yes Bank, an original Reliance Capital lender, sold its debt to JC Flowers ARC.