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Reliance Capital's Committee of Creditors (CoC) has given its approval to the resolution plan proposed by Indusind International Holdings Ltd (IIHL) for the troubled financial services company, bringing a finality to the long-drawn insolvency resolution process of the company, multiple people aware of the development told CNBC-TV18.

According to sources familiar with the matter, IIHL, which is the investment arm of the Hinduja Group, received an overwhelming majority of votes from the lenders, with 99.6 percent in favor of its resolution plan for Reliance Capital (RCap). The voting process to approve the sole resolution plan ended on Thursday.

Under the resolution plan, IIHL has proposed to acquire Reliance Capital for a sum of Rs 9,661 crore in upfront cash, as part of the Insolvency and Bankruptcy Code (IBC) proceedings, CNBC-TV18 has learnt. Additionally, Reliance Capital has a cash balance of approximately Rs 350-400 crores, which will also be distributed among the lenders, said people familiar with the matter. This comprehensive recovery plan is expected to result in a total recovery of around Rs 10,000 crore for the lenders, inclusive of the cash on the books of the company.

The Administrator of RCap will now file IIHL's resolution plan with the National Company Law Tribunal (NCLT) in Mumbai for the final approval, which is anticipated to take place next week. This crucial step will determine whether the proposed acquisition and recovery plan can proceed as intended.

Hinduja ‘s IIHL was the sole bidder for Reliance Capital in the last round of auction held for the company on April 26, CNBC-TV18 had earlier reported. The other suitors, Torrent Investments and Oaktree Capital didn't submit bids, nor did Piramal-Cosmea consortium.

Lenders had set Rs 9,500 crore as the threshold for participation in the auction, including a minimum Rs 8,000 crore as upfront cash. The Hinduja Group offered Rs 9,510 crore in the first round and raised this to Rs 9,650 crore in the second and final round. The amount has since been increased marginally to Rs 9661 crores, as per people familiar with the matter.

Also read: Reliance Capital vs Torrent IBC Case: Appellate tribunal allows second round of auction

It is important to note that Reliance Capital is currently facing claims totaling Rs 25,334 crore from secured and unsecured financial creditors under the IBC. The approval of IIHL's resolution plan by the CoC marks a significant step forward in the ongoing efforts to find a resolution for Reliance Capital. The administrator of RCap refrained from providing any comments regarding the recent developments reported by CNBC-TV18.

The Reserve Bank of India had superseded the board of Reliance Capital on November 30 last year, citing governance concerns and sent the company to bankruptcy courts for resolution. Reliance Capital is a core investment company with 20 units in its fold, including insurance, broking and asset reconstruction.

First Published:Jun 29, 2023 5:02 PM IST