Reliance Capital's Committee of Creditors Raises Alarm on Hinduja's Debt Proposal

Overview of the Reliance Capital Resolution Challenge

The committee of creditors (CoC) of Reliance Capital has raised concerns over the term sheets submitted by IndusInd International Holdings Ltd (IIHL), a company under Hinduja Group, for a proposed debt raise of ₹7,300 crore. Earlier this month, the National Company Law Tribunal (NCLT) instructed IIHL to provide the requested term sheets to the lenders as part of the resolution plan for Reliance Capital.

Tension Between IIHL and Creditors

Complications have arisen between the CoC and IIHL due to delays in executing the resolution plan, which was approved by the NCLT in February. The creditors' concerns focus on stringent conditions attached to the ₹7,300 crore debt that can only be fulfilled post-execution of the resolution plan, which complicates the drawdown of necessary funds to settle Reliance Capital's lenders.

• Hinduja Group must fulfill multiple conditions before funding can proceed.
• The conditions include a 26% shareholding transfer in insurance companies to Aasia, a Hinduja Group company.
• Additional terms may emerge that complicate the final agreements.

Key Conditions Affecting Funding

The term sheets propose critical actions, including:

1. Pledging equity shares of Reliance Capital Limited issued to IIHL.
2. Delisting current debentures and equity to facilitate the issuance of new securities.
3. Creating a first-ranking hypothecation over all Reliance Capital assets.

Furthermore, IIHL has enlisted 360 One and Barclays to raise ₹7,300 crore in debt, with responsibilities split between the two. One lender noted that the CoC has requested IIHL to expedite provision of definitive documents for review, pointing to the intricate and evolving nature of financing linked to this critical resolution.