IL&FS Sees Rs 55,000 Crore In Debt Resolution As Uday Kotak Exits

Three and a half years after Infrastructure Leasing and Financial Services went bankrupt, about 55% of the group's outstanding debt has been resolved. With that, banker Uday Kotak, who had been appointed non-executive chairman of IL&FS as part of a board constituted by the government, will step down.

Rs 55,000 crore in debt of the outstanding Rs 99,000 crore has been resolved, said managing director CS Rajan at a press conference. The debt resolved is about 90% of the target, Rajan said.

The group has already paid back debt worth Rs 21,000 crore to lenders and discharged it from its balance sheet. "Another Rs 16,000 crore worth cash and InvIT units would be available for interim distribution to creditors," Rajan said.

Creditors to IL&FS, IL&FS Financial Services and IL&FS Transport Network will receive 75% of this amount, according to Rajan. "An application for this has been filed with the NCLAT and hearings have begun."

Another Rs 14,000 crore is currently pending recoveries as legal proceedings at various courts are on-going. Neither Rajan nor Kotak gave any clear timelines on when these funds will be received.

With a bulk of the recoveries done, Kotak said he would exit when his current term expires on April 2. CS Rajan will take over as chairman thereafter. "We have received the official word from the government regarding this transition," Kotak said.

Our aim has always been to maintain going concern status and and ensure maximum recovery, Kotak said.

Among the more recent sale of assets has been that of the iconic IL&FS building at Bandra Kurla complex, which will be sold to Brookfield this year, for Rs 1,080 crore.

"When we started this was the only big building in BKC. Kuch thoda sa lagta hai (it hurts a little)," Kotak said in a rare emotional comment.

The lesson from the IL&FS experience, Kotak said, is to avoid complex hydra-like structures where you do not have enough control. Proper regulatory control is needed over such entities, he added.

As Kotak exits, he said eventual recoveries may be higher than the Rs 61,000 crore indicated so far.

In November 2021, the beleaguered infrastructure finance company had disclosed that debt worth Rs 52,000 crore had been resolved. That represented 86% of the target and 53% of the total debt. The group had then projected to resolve around Rs 57,000-crore borrowings by March.

After severe liquidity issues and serious governance concerns were brought to light at IL&FS in October 2018, the government had appointed a board led by Uday Kotak to resolve the stress at the infrastructure lender.

In November last year, the board had said 235 of the 347 entities estimated within the IL&FS Group in 2018 were resolved, including resolution applications filed with courts. Applications for 15 entities were expected to be filed by March 2022. In all, 97 more entities were expected to be resolved after March 2022.