LSF rejects plan to wind up RattanIndia Finance

RattanIndia Finance, a 50:50 joint venture between LSF and Rattan, hit the headlines in May following an allegation by the private equity firm that its Indian partner syphoned funds from the finance company. Rattan, also co-founder of Indiabulls, has denied these allegations.

Both parties are fighting a legal battle after an attempt for an out-of-court settlement between the two reached a deadlock.

In November, Rattan filed a voluntary winding-up petition of the finance company on “just and equitable grounds.” In its reply, LSF stated that the Indian promoter’s petition on winding up is “not maintainable, mutually destructive, and inconsistent.”

RattanIndia Finance has a Rs 850 crore balance with banks since it has stopped its lending business for over a year. The amount can be equally divided between the two partners if they mutually agree to wind up the company.

Rattan had offered USD 65m to LSF for its 50% stake in the company, on condition that the private equity firm stops pursuing all legal remedies against him, one of the persons quoted above said. LSF rejected the conditional offer.

“We continue to seek proper redress regarding Rajiv Rattan’s wrongful, fraudulent conduct, including misappropriation of corporate assets, in the NCLT proceeding that remains pending. As for winding up RattanIndia Finance, Rajiv Rattan has filed a petition that Lone Star believes is nothing more than a ploy to shift attention away from his fraudulent conduct,” LSF said in an email to ET.

Rattan stated that LSF has been “using arm twisting techniques” such as frivolous litigation to extract the best price.

“LSF has been continuously breaching the agreement and resorting to high-handedness and blackmail dreaming that this will help them achieve a high exit price. Indian promoters have full faith in the judicial process and will keep pushing to get justice,” the Indian promoter stated in an email to ET.

NCLT will hear the matter on January 24. Abhishek Manu Singhvi is legal counsel for Rajiv Rattan and Kapil Sibal is legal counsel for Lone Star.

Rattan alleged that Lone Star wanted to exit the Asia region as announced in July 2021 and hence it was “pressurising India promoters to buy their stake at an unrealistic price before the lock-in period ends.” LSF denied these allegations.

In a reply to Rattan’s petition for winding up the operations of the finance company, LSF stated that the JV partner has simultaneously filed two contradictory petitions. First, Rattan filed a petition stating that the private equity fund is forcing the finance company to “die its death” implying that he wanted the company to continue operations and later Rattan himself filed for winding up of the company.

LSF acquired a 50% stake in RattanIndia Finance in March 2018 by investing USD 100mn, while the balance is held by Rattan and his family.