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NCLAT allows 22 IL&FS firms to pay debt; approves Justice DK Jain for resolution process

Press Trust of India  |  New Delhi 

The (NCLAT) Monday allowed 22 companies of crisis-hit group, which were classified in green category based on their financial health, to service their obligations.

Besides, a two-member bench headed by Justice S J Mukhopadhaya approved appointment of former Justice D K Jain to supervise resolution process of crisis-hit and its group companies.

The appellate tribunal also lifted moratorium and allowed 133 firms incorporated outside to continue with the resolution process.

"We allow the boards (of the green companies) to permit them to service obligations as per schedule," said NCLAT.

The NCLAT's direction came during the hearing over government's plan for the resolution of IL&FS group companies.

IL&FS group companies are classified into three groups -- Green, Amber and Red, based on their respective financial positions.

The companies falling under green categories will continue to meet their payment obligation. While, the companies which can not meet their obligations but can meet only operational payment obligations to senior secured financial creditors are classified as the amber category.

And in the red category are those entities which can not meet their payment obligations towards even senior secured financial creditors.

In an affidavit filed before the NCLAT, the government informed former Justice D K Jain has agreed to supervise the resolution process of the IL&FS group companies.

As per the terms and agreement, Justice Jain will get a monthly remuneration of Rs 10 lakh per month and Rs 2.5 lakh per sitting, besides other expenses, which would be paid by IL&FS.

During the hearing, of appearing for the submitted a list of 302 subsidiaries of IL&FS, which are jointly controlled entities, group companies and associates forming part of IL&FS group companies.

Out of 302 companies, 169 companies are incorporated in and the remaining 133 are incorporated outside India, he added.

He further informed the NCLAT that out of 169 domestic companies, classification process under Green, Amber and Red categories has been completed for 69 firms as on February 9, 2019.

Out of 69, the government has marked 22 companies under Green, 10 in Amber and rest 38 in Red category.

Mehta sought permission from the appellate tribunal to allow the 'Green entities' to service their obligations as per scheduled repayment, to which the NCLAT agreed.

However, over Amber and Red category, the appellate tribunal said that it would pass any order after hearing them in next hearing on March 12.

"We want to know from the government and IL&FS as how they intend to resolve all entities particularly in 'amber' and 'red' group entities. Whether they would form a as normally done in the company resolution process," said the tribunal.

It also said that moratorium against them "can not continue for an indefinite period".

During the hearing, senior lenders such as Indusind Bank, L&T and & Capital Fund opposed the government's plea to make the Amber and Red companies to make payment necessary only to maintain and preserve their going concern status.

Abhishek Manu Singhvi, appearing for submitted that any such payment would have a great cascading effect on the NPAs of the top five lenders of the group companies.

The major group companies which are in green list include - Manager, IL&FS Security service, IL&FS Paradip Refinery Water, Tamil Nadu Water Investnent, IL&FS Asian Infrastructure Manager, IL&FS Urban Infrastructure Manager, IL&FS Infra Asset Management, North Karnataka Expressway, IL&FS Solar Power, Tadas Wind Energy, Khadke Wind Energy, Etesian Urja,Kaze Energy, Wind Urza India, Logiparks, Lalpur Wind Energy, Jharkhand Infrastructure Invest Company, IIML Asset Advisors, and IISL Settlement & Transmission Services.

Still over 100 IL&FS group companies are remained under the assessment of the resolution consultants for classifications, the affidavit further informed.

The government will file another affidavit in next two weeks, classifying these remaining 100 companies, it added.

On February 5, the NCLAT had asked the government to provide a list of IL&FS group companies along with their categorisation based on their respective financial positions.

The entire resolution process will be based on the principles enunciated in the and Code.

In its debt resolution plan, the corporate affairs ministry has fixed September 30, 2018 as the cut-off date for entertaining the claims submitted by the lenders. On October 1 last year, a newly appointed board took over the reins of IL&FS.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, February 11 2019. 20:30 IST