9 April 2019: In a move to protect the investments of pension funds and provident funds, the National Company Law Appellate Tribunal has sought the details of the investment of such funds in “amber” companies of the debt laden Infrastructure Leasing and Financial Services (IL&FS).
The tribunal may be keen to release at least those payments that are due to these funds. The IL&FS group has a total group debt of Rs 94,216 crore.
The bench also directed that no organisations including the National Highway Authority of India take any step to cancel any agreement with any company in question in response to claims by lenders that NHAI intended to cancel agreements with certain IL&FS group entities and this would harm their ability to maintain the status of a going concern.
“How many companies are there who have provident funds and pension funds. You release them. We want that that should be released first.” said a two-member bench led by justice SJ Mukhopadhaya on Monday.
The bench directed all financial and operational creditors of amber companies to hand over details of amounts payable and matured as well as the amounts generated from provident funds, pension funds, gratuity funds etc.
The tribunal was hearing appeals by senior secured lenders of “amber” companies that payments due to them be released. All group companies of IL&FS are being classified according to their ability to meet payment obligations. Group companies able to meet all payment obligations are categorised as ‘green’. Those companies able to meet only operational payments and senior secured debt obligations are categorised as “amber”. Others are categorised as “red.”
Of the 169 IL&FS group companies, 50 entities have been classified as green, while 13 have been classified as amber and 80 as red. The total outstanding debt of the 13 ‘amber’ firms is Rs 16,373 crore.
All but 50 of the 169 domestic group companies of IL&FS are currently enjoying a moratorium on all financial claims against them ordered by the NCLAT for an orderly resolution of claims against the group.
Counsel for IL&FS said that if payments were made to individual creditors of amber companies, it would have a negative impact on the resolution of other group entities.
Counsel for the government said that the government was confident of resolving many of the cases in two months by forming a committee of creditors and evaluating bids from prospective buyer of group entities.
Counsel for creditors of amber companies however said that they would not participate in the planned resolution process as “amber” companies had not defaulted. The bench also asked IL&FS and government to submit details of amber companies as well as operational and financial creditors of amber companies pursuant to an earlier order as it had not been filed in a format that the appellate tribunal wanted.