Bad news for creditors as IL&FS, 40 arms move NCLT seeking debt protection

According to corporate law experts, by moving the Mumbai Branch of NCLT, IL&FS is seeking more time to repay its debt

Infrastructure Leasing & Financial Services (IL&FS) and its 40 subsidiaries have filed a petition before the National Company Law Tribunal (NCLT), Mumbai, under Section 230 of the Companies Act, 2013, seeking to restructure their debts. This will delay debt repayments to its lenders.

The Small Industries Development Bank of India (Sidbi), one of IL&FS’ creditors, has moved insolvency court against the company, seeking its money back. IL&FS owes nearly Rs 10 billion to Sidbi.  Sidbi wants to recover Rs 4.5 billion from IL&FS and about Rs 5 billion from its subsidiary IL&FS Financial Services. IL&FS moved the NCLT on Monday, “seeking certain relief” in connection with the filing of scheme of arrangement. The scheme will be subject to approval from shareholders, creditors, and the board of directors of the relevant entities, the company said in a filing with the BSE on Tuesday.

Section 230 to 240 of the Companies Act, 2013 contains provisions on ‘compromises, arrangements and amalgamations’. After an application is filed, the tribunal calls for a meeting of its shareholders and lenders. After that, the company’s debt restructuring plan is put to vote. 

 

The subsidiaries that have moved the NCLT include IL&FS Financial Services, IL&FS Transportation Networks, IL&FS Energy Development, and IL&FS Engineering & Construction. 

“This is bad news for all the creditors of IL&FS and its 40 subsidiaries. By moving the NCLT, IL&FS is seeking time to repay its debt. It’s clear they don’t have the money to repay,” said a corporate lawyer.  The company has a consolidated debt of Rs 910 billion. It has missed loan repayments to a host of banks in the past one month.  

According to Section 230 of the Companies Act, the application to the tribunal has to disclose all material facts related to the company, such as the firm’s latest financial position, the latest auditor’s report, and whether any investigation is pending against the firm. It also has to disclose reduction of share capital of the company and any scheme of corporate debt restructuring consented to by not less than 75 per cent of the lenders.

IL&FS and the 40 group companies that have moved NCLT

 

IL&FS

IL&FS FInancial Services Ltd (IFIN)

IL&FS Transportation Networks Limited   

IL&FS Engineering & Construction Company 

Baleshpur Kharagpur Expressway

Zealand Ports

Barwe Adda Expressway

East Hyderabad Expressway

Thiruvanantpuram Road

IL&FS Energy Development Company Limited 

MP Border Checkpost Dev Ltd 

Kiratpur Net

Khed Sinnar Expressway

ITNL Road Infrastructure Pvt Ltd

Karyavattam Sports Infra

IL&FS Rail Ltd

Rapid Metro Rail Gurgoan South

Noida Toll Bridge

IL&FS Energy Development Company Limited 

IL&FS Wind Energy

ILFS Solar Power Ltd

Vejas Power Projects

Rohtas Bio Energy

Patiala Bio Power Ltd

Mahidad Wind Enery

Nana Layja Power

IL&FS Maritime Infra

Gujarat Interegrated Martime Infra Company Ltd

IL&FS Environmental Infrastructure 

East Delhi Waste Company

RDF Power Projects

Unique Waste Processing 

Tierra Envior Ltd

Dakshin Dilhi Swatchh Initiative Ltd

Sabarmati Capital One

Sabarmati Capital Two 

Hill County Properties Ltd

Hill County SEZ Ltd 

Maytas Logipark Malkapur

Downtown Recreation Pvt Ltd