27 June 2019: The Infrastructure Leasing & Finanacial Services board will on June 28 take up a proposal to release stuck payments of creditors in 13 group entities, according to a senior government official. An apppellate tribunal had set July 12 as deadline for the IL&FS group to reach an agreement with creditors of these 13 companies to begin releasing payments.
These companies have a total outstanding debt of Rs 16,372 crore.
IL&FS had earlier agreed in principle to begin servicing the debt of one of the 13 companies—Moradabad Bareilly Expressway—after some creditors agreed to reduce interest rates on outstanding loans and release payments to operational creditors and creditors within the IL&FS group.
The group intends to follow a similar process to reach agreements with the creditors of the other 12 companies.
The National Company Law Appellate Tribunal had in October granted a moratorium on claims against all group entities to allow for an orderly resolution of IL&FS after shock defaults by the group in September set off a liquidity crunch among non-banking finance companies (NBFCs).
Subsequently, the NCLAT directed that 55 group entities begin servicing their debts. The rest 114 domestic group entities, however, are currently not servicing debt obligations.
The official also said that IL&FS can proceed with plans to sell these companies through a bidding process akin to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code if it fails to reach an agreement with their lenders.
The government is of the view that monetisation of company assets through infrastructure investment trusts (inVits) would be the best option to resolve the debts of these companies if IL&FS is not able to get a fair value for these entities through the bidding process, the official added.
“Bids are a superior alternative but, if there is any problem with getting good offers then inVits would be the ideal alternative,” said the official.
InVits are often used to monetise operational infrastructure assets by raising funds from investors who are then entitled to dividends from cash flows to the infrastructure project. Funds raised through inVits can then be used to fulfill debt obligations.