NCLAT Asks IL&FS To Consider Allowing More Arms To Service Debt

The National Company Law Appellate Tribunal today asked the IL&FS group to consider moving more companies to the green group, enabling them to service debt obligations.

The group will have to inform the court of its decision by July 12. In the event of failure to promote the companies to green group, the amber companies will be allowed to proportionally service debt obligations, the appellate tribunal indicated.

The subsidiaries of IL&FS were classified into three groups:

• Green: that can service financial and operational debt.
• Amber: that can repay operational debt.
• Red: which can’t repay debt at all.

In today’s hearing, the IL&FS counsel informed the appellate tribunal that they have taken steps to promote one of the amber group companies to green and that the term sheet has been finalised and is pending board approval. The IL&FS told the court that some other entities may also be declared green if they find it to be viable and the terms of settlement will be placed before the lenders for approval.

The NCLAT allowed categorising amber company, Moradabad Bareilly Expressway Ltd., as green and seek the required approvals.

The appellate tribunal made it clear that if by the next date of hearing, the remaining amber companies are not declared to be NPAs, the NCLAT may pass orders which may include requiring them to proportionally service debt obligations.

The matter will come up for hearing on July 12.