Reliance Capital administrator seeks implementation of IIHL's resolution plan

“It is imperative that the NCLT takes notice and directs IIHL to comply with the 23 July order, which the company has failed to comply with and has been employing delaying tactics in terms of implementation of the plan," the administrator said in the petition filed on Monday. Mint has reviewed a copy of the petition.

The administrator said the company’s debt stood at ₹26,000 crore when it was admitted into insolvency on 6 December 2021, and implementation of the resolution plan for Reliance Capital is important not only for its lenders but the banking sector in general.

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The NCLT is likely to take up the matter on Wednesday, a lawyer aware of the matter said on condition of anonymity.

The tribunal approved IIHL’s ₹9,861 crore resolution plan for Reliance Capital in February for implementation by 27 May. However, IIHL sought an extension, citing various reasons, and was given time till 10 August.

However, IIHL failed to provide the commitment letters enclosing the term sheets issued by Barclays Banks and 360 One for an aggregate loan amount of ₹7,300 crore, saying they were highly confidential. IIHL undertook to provide the letters to the committee of creditors (CoC) in a sealed envelope upon the tribunal's instructions.

Contrary to order

The Reliance Capital administrator alleged that the undertaking was a deliberate and wilful act of disobedience that was contrary to the letter and spirit of the NCLT’s 23 July order.

The NCLT had directed IIHL to deposit ₹2,500 crore in a designated escrow account of the CoC by 31 July, while extending the implementation of the resolution plan by IIHL to 10 August.

“Instead of protecting the creditors and providing comfort and security by depositing the said amounts in CoC-designated amounts, IIHL deposited those monies into its own accounts, not only not designated by CoC but also not within its control and deemed that this is satisfactory compliance with the order. IIHL appears to be trying to hoodwink the CoC and this NCLT. IIHL cannot be the judge of its compliance under the July order," the administrator said in the petition.

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An affidavit filed by the administrator earlier showed that instead of complying with the tribunal’s order, IIHL had filed a compliance affidavit stating that ₹250 crore had been deposited in the accounts of IIHL’s promoters Ashok Hinduja, Shom Hinduja and Harsha Hinduja.

Under the resolution plan, IIHL was to deposit the initial amount of ₹250 crore in a domestic escrow account and ₹2,500 crore in an offshore escrow account of the CoC by 31 July. Subsequently, IIHL filed an interlocutory application before the NCLT last week, seeking modification of the tribunal’s order. In this regard, the administrator has opposed granting any relief to IIHL.

“The compliance affidavit is thus a complete sham designed to buy time and feign compliance," the administrator said in the petition, adding that none of the conditions has been fulfilled by IIHL and that it is contempt of court by violating the July order.