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IL&FS New Board of Directors awarded Rs 16,361 to creditors

IL&FS New Board of Directors awarded Rs 16,361 to creditors

New IL&FS board awards Rs 16,361 crore to creditors under the direction of NCLAT

New Delhi:

The National Company Law Appeals Court (NCLAT) has directed the new board of directors of the heavily indebted IL&FS Group to distribute Rs 16,361 in cash and available InvIT units across the Group to its creditors. their own proportions.

A provisional distribution bonus of Rs 16,361 crore consisting of Rs 11,296 in cash and Rs 5,065 per unit of InvIT (Investment Infrastructure Trust) and the majority of this amount will be distributed among the three creditors. large group companies – IL&FS, IFIN and ITNL.

“The provisional distribution will be limited to entities only as reflected in Appendix-6 excluding those excluded and to the amount of Rs 16,361 i.e. Rs 11,296 in cash and Rs 5,065 of InvIT Units ,” an order of two-bench NCLAT members headed by President of Justice Ashok Bhushan.

As for the interim distribution, the NCLAT said it “will only be done after approval of the new board of directors” and “will take place on a pro-rata basis”.

The Court of Appeals also directed IL&FS to complete the settlement by the end of this month and directed the listing of the matter on July 19, 2022 for the next hearing.

“We are of the opinion that IL&FS and its entities can take all steps to complete the settlement process under the settlement framework and submit their Application for pre-approval to the NCLT by June 30, 2022. “, NCLAT said in its order dated May 31, 2022.

Furthermore, the NCLAT said the interim distribution “will be subject to the final resolution of the IL&FS entities under the settlement framework” and that creditors will be required to provide “a commitment to repay the excess, if yes, as a last resort”.

Meanwhile, due to objections from creditors, they also directed the four companies to be kept out of the distribution process.

The companies are – IL&FS Transportation Networks, Rapid Metro Rail Gurgaon South, Rapid Metro Rail Gurgaon and IL&FS Wind Energy.

According to an IL&FS spokesperson, more than 75% of this amount will be distributed to creditors of the three major parent companies – IL&FS, IFIN and ITNL – many of which are public fund creditors under the settlement and public funds. basic distribution.

IL&FS has collected an overall debt of Rs 99,000 crore from a variety of sources – including private banks and PSUs and public funds – mostly from four parent companies – IL&FS, ITNL, IFIN and IEDCL.

These loans, provided by banks and public funds in the parent companies, were further extended into unsecured loans and secondary loans to the junior companies within the group.

Under the IL&FS settlement framework, the parent companies cannot receive any payment from the proceeds unless the underlying companies are fully and final settled.

As a result, creditors including the public fund at the parent company level are locked up and cannot receive any settlement funds until the final resolution of all downstream companies is resolved. completely.

In March, IL&FS said it had settled a debt of Rs 55,000 crore, or nearly 55% of the debt, after the group became a defaulter and the government replaced its board in March. October 2018.

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