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The National Company Law Appellate Tribunal (NCLAT) on Monday directed 22 domestic subsidiaries of debt-ridden infrastructure major IL&FS to service their operational and financial debt obligations.
It has also lifted the debt moratorium on 133 foreign group entities to enable them to continue their resolution process, which would be supervised by the retired Supreme Court judge, Justice DK Jain, who has been appointed to oversee the sale process of IL&FS assets so that the group could pare its ₹91,000-crore debt.
The NCLAT had, in October last year, proposed a 90-day moratorium on loans taken by IL&FS and its 348 subsidiaries.
According to the affidavit filed by Rakesh Tiwari, Regional Director (Western region), Ministry of Corporate Affairs, in compliance with the previous order of the NCLAT dated February,4, the government has classified IL&FS group entities based on their stress and the ability to service debt.
Out of the 348 entities of IL&FS, 46 have been closed, struck off, divested or liquidated, the affidavit says. Of the remaining 302 operational entities, 133 are registered outside India, and will be dealt with separately. The balance 169 domestic entities will be classified into three categories — ‘green’, ‘amber’, and ‘red’.
Segregation of subsidiaries
Till date, only 69 entities have been classified, while the ‘classification exercise’ for others will continue, the affidavit notes.
Of the 69 entities, 22 have been classified ‘green’. These entities can service all their financial and operational debt as and when they become due. These include companies such as IL&FS Investment Managers (IIML), IL&FS Securities Services (ISSL), IL&FS Paradip Refinery Water Limited(IPRWL), Tamilnadu Water Investment Company, IL&FS Infra Asset Management and IL&FS Solar Power.
Ten companies — which can service only their operational debt obligations and payment to senior secured financial creditors — have been marked ‘amber’. These include IL&FS-listed entities IL&FS Transportation Networks India Ltd (ITNL) and IL&FS Tamil Nadu Power Company, as well as several road projects.
Of the remaining entities, 38 have been marked ‘red’ as they cannot meet any of their payment obligations, even those towards senior secured financial creditors.
The NCLAT has not lifted the moratorium on the ‘amber’ and ‘red’ categories. The tribunal has fixed March 12 as the next date of hearing.
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