Despite NCLAT moratorium, lenders have debited ₹759 crore from group firms: IL&FS

Venkatesh Ganesh Mumbai | Updated on August 17, 2019 Published on August 17, 2019

Despite a status quo ordered by the National Company Law Appellate Tribunal (NCLAT) on accounts related to IL&FS, some banks and financial institutions have debited ₹758.59 crore from various accounts held by the company’s subsidiaries without authorisation.

In its fifth progress report, IL&FS said: “In contravention to the October 15 order, banks and financial institutions have been debiting the accounts of IL&FS Group entities which are classified as ‘Amber’ and ‘Red’, without authorisation from the Group.” Amber companies are those that are able to partially pay off their loans while the Red ones are those that are unable to meet their debt obligations.

“With respect to cash credit facilities provided by the lenders to the IL&FS Group entities, certain banks and financial institutions have been appropriating interest by debiting the current accounts of relevant IL&FS Group entities on a monthly basis (in respect of the accrued interest) in spite of the October 15 order,” IL&FS said.

Contempt of court

The NCLAT order had categorically said that if any financial institution or bank debited any amount in violation of the order, IL&FS can bring it to its notice for appropriate orders and also intimate the bank or financial institution that it may amount to contempt of court.

In its February 11 order, the NCLAT had also said that all ‘Green’ entities will service their debt obligations as per the scheduled repayment, which should be within the resolution framework.

If the creditors of IL&FS Group continue with such actions, it will result in a ‘going concern’ tag, which deteriorates the value and impacts the organisation's functioning, IL&FS said.

Going concern

A ‘going concern’ in accounting parlance is a company that has the ability to make enough money to stay afloat. IL&FS also said that if the ‘going concern’ payments are not made on time, it will impact the implementation of the resolution framework.

Of the 169 Indian IL&FS entities, the resolution consultant has classified 158. The remaining 11 companies’ classification is currently underway. Fify-five have been classified as Green, 13 as Amber and 82 as Red. Another eight entities have been declared insolvent and are undergoing IBC proceedings.

The IL&FS board also said the Red entities owe ₹61,375 crore, the Amber entities, ₹16,372.6 crore, and Green ones, ₹11,022.9 crore.

The 11 which remain to be classified owe ₹5,895.9 crore.

The progress report also said that the assets for which sale process has been launched so far (except certain non-core assets) account for approximately ₹50,000 crore of the total outstanding fund-based debt exposure of ₹94,000 crore.

Published on August 17, 2019
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