Three More IL&FS Entities To Soon Start Servicing Debt Obligations
PF and pension funds to get priority, reiterates NCLAT.
The National Company Law Appellate Tribunal, headed by Justice SJ Mukhopadhayay, has allowed three ‘amber’ companies of the IL&FS Group to be re-categorised as ‘green’, enabling them to service debt obligations.
The three entities selected by the central government include—Jharkhand Road Projects & Implementation Company Ltd., Moradabad Barielly Expressway Ltd., Western Gujarat Expressway Ltd.
The appellate tribunal once again re-iterated that in repayment of debt obligations, provident fund and pension will get priority over the others. The NCLAT has directed this earlier too, in April.
According the Ministry of Corporate Affairs, around Rs 7,009 crore worth of investment has been made in IL&FS by provident fund.
The counsel for IL&FS and the government informed the court that a binding term sheet has been signed between the Infrastructure Leasing & Financial Services Ltd. and the creditors for two of the three projects. As for the Moradabad Barielly Expressway Ltd. project, Bank of India is the last remaining to sign and will do so in a few days. The binding documents are to be executed for release of payment.
IL&FS group entities were classified into three categories—green, amber and red—based on their ability to service debt obligations. Entities classified as 'green' are those which continue to meet their payment obligations, while 'amber' category firms can meet only operational payment obligations to senior secured financial creditors. Those falling in the 'red' category are the entities which cannot meet their payment obligations towards even senior secured financial creditors.
There were a total of 13 entities in the amber group and the NCLAT has asked the government to inform on the conversion of the remaining 10 amber group companies to green.
The next date of hearing will be on Aug. 8 at 3 p.m.