NCLT Mumbai Approves Rs. 9,661 Crore Resolution Plan By Indusind International Holdings For Reliance Capital
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice V.G. Bisht (Judicial Member) and Mr. Prabhat Kumar (Technical Member) has approved the Rs. 9,661 crore resolution plan submitted by IndusInd International Holdings Ltd ('IIHL') for Reliance Capital under Section 31 of the Insolvency and Bankruptcy Code, 2016 ('IBC'). Background Facts: On 06.12.2021, NCLT...
The National Company Law Tribunal ('NCLT') Mumbai, comprising Justice V.G. Bisht (Judicial Member) and Mr. Prabhat Kumar (Technical Member) has approved the Rs. 9,661 crore resolution plan submitted by IndusInd International Holdings Ltd ('IIHL') for Reliance Capital under Section 31 of the Insolvency and Bankruptcy Code, 2016 ('IBC').
Background Facts:
On 06.12.2021, NCLT Mumbai admitted the Corporate Insolvency Resolution Process ('CIRP') application and appointed Mr. Nageswara Rao Y (Applicant) as the Administrator of Reliance Capital Limited (Corporate Debtor). The IIHL's Resolution Plan was approved by the Committee of Creditors ('CoC') with a majority of 99.60% in terms of Section 30(4) of IBC and the appropriate rules and regulations thereunder.
The Applicant applied to seek approval of the Resolution Plan of the IIHL as the successful resolution applicant.
Outlay of the Resolution Plan:
IIHL, the Resolution Applicant, is based in Mauritius carrying out the business of investment holding and holds shares in different companies spread across sectors. The implementing entity is IIHL BFSI (India) Limited which is a subsidiary of the IIHL.
As far as the Outlay of the Resolution Plan is concerned, the Resolution Plan of IIHL is valued at Rs. 9,661 crore. Out of the total claims of Rs 38,526.42 crore, only Rs 26,086.75 crore were admitted by the NCLT with a massive haircut of 63 percent. The average fair value of the Corporate Debtor is Rs. 16,696.05 crores and the average Liquidation value is Rs. 13,158.46 crores.
The distribution proposed amongst different creditors in the Resolution Plan is provided below:
· Workmen and Employees: Section 53 of IBC provides priority to the dues of workmen under the distribution of assets. In the instant matter, despite an admitted claim of Rs. 5.71 crores towards workmen and employees, their payment has been settled for NIL.
· Financial Creditors: The Plan provides that the secured financial creditors who voted in favor of the Resolution Plan be paid in full to the extent of their outstanding principal amount. The unsecured financial creditors have been proposed to be paid 5% of their admitted claims.
· Operational Creditors: The Plan provides that payment towards Related Party Creditors be settled for NIL.
Reliance Capital's cash balance of an additional Rs 500 crore would also go to the lenders.
NCLT Verdict:
The NCLT Mumbai allowed the application and approved the Resolution Plan of IIHL.
The Tribunal mandated that the Resolution Plan be legally binding on the Corporate Debtor, encompassing its employees, members, creditors (including the Central Government, any State Government, or local authority owed debts under current laws), guarantors, and other stakeholders associated with the Resolution Plan.
Case Title: Mr. Nageswara Rao Y, Administrator of Reliance Capital Limited vs. Committee of Creditors of Reliance Capital Limited and IndusInd International Holdings Limited
Case No.: I.A. No. 2949 of 2023 in CP (IB) No. 1231 of 2021
Counsel for Applicant: Mr. Gaurav Joshi, Senior Advocate, Mr. Rohan Kadam, Mr. Abhishek Adke, Mr. Sagar Vichare, Advocates
Counsel for Committee of Creditors: Ms. Pooja Dhar, Mr. Piyush Mishra, Advocates
Counsel for Successful Resolution Applicant: Mr. Venkatesh Dhond, Senior Advocate, Mr. Kunal Mehta, Ms. Bhumika Batra, Ms. Vidhi Dhanuka, Mr. Jhaveri, Advocates