How to save ILFS? Kill the lender's toxic culture by dismembering it

If IL&FS is sold in its present form, its toxic culture, which has for three decades involved inflating project values, will eventually revive

The $12.8 billion bankruptcy of shadow lender Infrastructure Leasing & Financial Services Ltd. is starting to offer a glimmer of hope.

It’s about time. Unexpected defaults by the financier, owner, and operator of Indian infrastructure assets have caused a liquidity squeeze, which has brought strained relations between the government and the central bank to breaking point.

The good news is that the new government-appointed board, which can resolve the insolvency without creditors swooping in on assets held across 347 IL&FS firms, has drawn up three sensible approaches.

These may be mixed and matched to extract the most value.

The first