Hinduja Group’s revival proposal for Reliance Capital, promoted by Anil Ambani, gets approval from NCLT

On Tuesday, the National Company Law Tribunal (NCLT) gave its approval to IndusInd International Holdings Ltd (IIHL), a company under the Hinduja Group, to acquire bankrupt Reliance Capital Ltd. This decision marks a significant milestone in the lengthy acquisition process.

In July of last year, IIHL, the promoter of IndusInd Bank, submitted a bid of ₹9,861 crore to acquire Reliance Capital, which was later approved by the administrator. The bid garnered strong support from creditors, with 99% voting in favor.

However, Hinduja became involved in a legal dispute with Ahmedabad-based Torrent Investments over the submission of bids during the corporate insolvency resolution process (CIRP).

In December 2022, Torrent Investments led the bidding for Reliance Capital’s insolvency auction with an offer of ₹8,640 crore. Subsequently, IIHL proposed a higher bid of over ₹9,000 crore, leading lenders to initiate a second auction or extended challenge mechanism to ensure the best recovery value for the insolvent firm.

Feeling aggrieved, Torrent approached the NCLT in January 2023, which ruled in favor of Torrent, stating that the second auction breached CIRP norms.

Lenders contested this decision at the National Company Law Appellate Tribunal in March 2023, which allowed the second auction to proceed in order to maximize the value recovered from Reliance Capital.

In August 2023, Torrent Investment appealed to the Supreme Court to prevent the NCLT from considering IIHL’s settlement plan. However, the apex court declined to intervene in the NCLT proceedings.

In November 2021, the Reserve Bank of India took over the management of Reliance Capital due to payment defaults and significant governance concerns.

Reliance Capital had secured debts totaling ₹16,000 crore, with admitted claims exceeding ₹23,666 crore.

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