Reliance Capital Limited (NSEI:RELCAPITAL)?s lenders don't intend to liquidate the company and simply want fair compensation and certainty that IndusInd International Holdings Ltd.'s (IIHL's) resolution plan will be implemented promptly, the committee of creditors (CoC) said in filings with the bankruptcy tribunal on July 1, 2024. RCap administrator Nageswara Rao Y also made certain submissions before the tribunal. Mint has reviewed copies of both filings.

According to the lenders, IIHL has yet to commit funds to the plan though it has been more than 12 months since it was submitted, more than 11 months since the CoC approved it, and four months since NCLT approved it. "Despite that, IIHL has failed to demonstrate financial tie-up (of) both debt and equity to the satisfaction of CoC," read the lenders' submission. The filings were in response to IIHL's application seeking a 90-day extension to implement its resolution plan.

The Hinduja Group-owned firm received the NCLT's approval for its INR 98.61 billion plan in February, and the deadline to implement it was 27 May. The plan involves INR 73.00 billion in borrowing from lenders, a INR 25.00 billion equity infusion by IndusInd International from outside India, and another equity infusion of INR 2.50 billion by Cyqure India, a Hinduja Group associate. The lenders said on July 1, 2024, "IIHL has been saving on financing costs on the debt of INR 73.00 billion which it was required to bring by 27 May, while gaining returns on equity of INR 27.50 billion which is deployed or invested in other business by IIHL and would be yielding greater returns." The lenders also said IIHL failed to disclose the internal rate of return (IRR), which was only revealed during the NCLT hearing.

IRR is a metric used in financial analysis to estimate the profitability of potential investments. The lenders had previously said they would approve the extension if they were compensated with 12% interest on the value of the INR 98.61 billion resolution plan. IIHL had said it was seeking an extension as it was awaiting approval from the Department for Promotion of Industry and Internal Trade (DPIIT).

However, the lenders pointed out that IIHL wasn't ready to implement the resolution plan on 27 May in any case. Also, the delay in applying for DPIIT approval was also based on a unilateral mistake of law by IIHL, the lenders said on July 2, 2024. They added that IIHL applied for DPIIT approval directly, without the consent of the CoC.

"The CoC is not in the business of running the operations of the corporate debtor," lenders said in their submissions. "This also does not form part of the CoC approval items under Section 28 of the IBC. Under the resolution plan itself, clearly the obligation to obtain approvals is of the resolution applicant and not the COC." Emails sent to IIHL and the RCap administrator remained unanswered.