A deadlock over escrow agreements between Anil Ambani-promoted Reliance Capital’s creditors and IndusInd International Holdings Ltd (IIHL) lenders has stalled the final Rs 4,300-crore funding required to complete the acquisition.
IIHL has filed an interlocutory application in the National Company Law Tribunal (NCLT) Mumbai to resolve the matter, as both sides remain divided on the “unwinding” mechanism in case of litigation during the escrow period.
ET has reviewed a copy of the application.
IIHL was required to bring in Rs 9,861 crore to complete the transaction, comprising Rs 2,750 crore in equity and Rs 7,300 crore in debt. IIHL has so far deposited Rs 5,750 crore, which is 58.31% of the total payout in escrow, including the equity portion and Rs 3,000 crore in debt. However, the remaining funds, backed by Reliance Capital’s insurance subsidiaries, require CoC approval and a clear resolution framework. The CoC had approved a “Fund Flow Note” with 89.07% voting in favour, but the impasse over escrow terms is now blocking the transaction’s completion.
As part of the agreed process, IIHL had to submit certain documents to the administrator and the Committee of Creditors (CoC). By January 31, 2025, it had submitted all required documents except for two key escrow agreements-the intermediate escrow agreement and the global escrow agreement.
A spokesperson of IIHL did not immediately respond to a request for comment.
“Reason why the two escrow agreements could not be submitted is because of a deadlock between the present creditors, that is CoC and the lenders of IIHL (who are funding Rs 4,300 crores) on one point- unwinding,” IIHL said in its application.
The second tranche of funding of Rs 4,300 crore is backed by Reliance Capital’s insurance subsidiaries and raised from lenders including 360 One, Barclays and Bank of America.
As per the agreed “Fund Flow Note,” lenders of IIHL will first transfer the money to the intermediate escrow account. These lenders are concerned that if a legal dispute arises while the money is in escrow but before the shares are transferred, there is no clear process for getting their money back.
“Because of no resolution – the parties are stuck and before this court at NCLT seeking guidance,” IIHL said in its application.
Resolution plan submitted by IIHL was approved by NCLT in February last year, however, IIHL sought extensions from NCLT to complete the transactions. It has to close the transaction by mid February, a source said.
