Sivasankaran group firm offers to settle dues with IL&FS Financial Services

Siva Shelters says of the dues worth Rs 76 cr claimed by IFIN, it will pay Rs 50 cr along with normal interest at 14% plus penal interest until all dues are fully cleared

Chennai based C Sivasankaran group company, Siva Shelters and Constructions Pvt Ltd, has offered to settle all its dues with IL&FS Financial Services Ltd by offering to pay the entire principal amount and interest.

According to the settlement proposal sent to IFIN, Siva Shelters said of the dues worth Rs 76 crore claimed by IFIN, it will pay Rs 50 crore along with the normal interest at the rate of 14% per annum until all dues are fully cleared, amounting to Rs 17.23 crore. The company also promised to pay penal interest per annum till entire dues are paid.

Siva Shelters said it is prepared to make 20 per cent of the settlement amount immediately after signing the binding agreement and promised to clear the entire amount by March next year. The group said it will raise the funds for the settlement by selling its assets and raising funds from friends and relatives.

The Siva group has also offered to repay dues of other group companies. IL&FS has exposure to Sivasankaran group companies as it had subscribed to the debentures of Siva group companies. As of March 2015, the exposure of IFIN to Siva group stood at Rs 184 crore, as per court filings. The SFIO had filed a chargesheet against IFIN officials in June 2019 for giving loans without adequate cover to Siva group companies.

During December 2015, IFIN had subscribed to optionally convertible debentures of Siva group — effectively interest-free debentures. These debentures were unsecured for five years. The RBI has recommended 100 per cent diminution of value on these investments upon inspection. By 2018, IL&FS collapsed as it failed to repay its own lenders – leading to multiple investigations by regulatory agencies.  At the time of collapse, the IL&FS group operated a complex web of companies with hundreds of subsidiaries and was sitting on a debt of Rs 94,000 crore.

The Siva group companies have also offered to settle their accounts with public sector banks. In August, the National Company Law Tribunal (NCLT) Chennai recently rejected a petition by Siva Industries to settle its dues worth Rs 5,000 crore with public sector banks under Section 12A of the Insolvency and Bankruptcy Code, 2016 saying the banks are receiving only six per cent of their dues. The matter is now pending in the NCLAT.

The settlement offer

• Siva Shelters to pay entire principal amount of Rs 50 cr

• Company to pay interest of Rs 17 cr

• All dues to be cleared by March next year

• IL&FS group exposure of Rs 186 cr in Siva group cos