IL&FS, 40 of its subsidiaries move National Company Law Tribunal seeking to restructure debt

Infrastructure Leasing & Financial Services Limited (IL&FS), an Indian infrastructure development and finance company, which has defaulted on a series of interest payments, has along with its subsidiaries moved an application with the National Company Law Tribunal (NCLT), Mumbai Bench, seeking reliefs towards its loan under Section 230 of the Companies Act, 2013. This was filed for the firm and its  company and its subsidiary, IL&FS Financial Services Ltd (IFIN), media reports said. According to a filing with the exchanges, on Monday, IL&FS moved the NCLT in Mumbai “seeking certain reliefs” in connection with filing of scheme of arrangement under Section 230 of the Companies Act. Section 230 of the Companies Act, 2013, contains provisions on ‘Compromises, Arrangements and Amalgamations’, that covers compromise or arrangements, mergers and amalgamations, Corporate Debt Restructuring, demergers, fast track mergers for small companies/holding subsidiary companies, cross border mergers, takeovers, amalgamation of companies in public interest, etc. The forty subsidiaries of IL&FS are: IL&FS, IL&FS Financial Services Ltd (IFIN), IL&FS Transportation Networks Ltd, IL&FS Engineering & Construction Company, Baleshpur Kharagpur Expressway, Zealand Ports, Barwe Adda Expressway, East Hyderabad Expressway, Thiruvananthapuram Road, IL&FS Energy Development Company Limited, MP Border Checkpost Dev Ltd, Kiratpur Net Khed Sinnar Expressway, ITNL Road Infrastructure Pvt Ltd, Karyavattam Sports Infra, IL&FS Rail Ltd, Rapid Metro Rail Gurgoan South, Noida Toll Bridge, IL&FS Energy Development Company Limited, IL&FS Wind Energ, ILFS Solar Power Ltd, Vejas Power Projects, Rohtas Bio Energy, Patiala Bio Power Ltd, Mahidad Wind Energy, Nana Layja Power, IL&FS Maritime Infra, Gujarat Interegrated Martime Infra Company Ltd, IL&FS Environmental Infrastructure, East Delhi Waste Company, RDF Power Projects, Unique Waste Processing, Tierra Envior Ltd, Dakshin Dilhi Swatchh Initiative Ltd, Sabarmati Capital One, Sabarmati Capital Two, Hill County Properties Ltd, Hill County SEZ Ltd, Maytas Logipark Malkapur, and Downtown Recreation Pvt Ltd. [caption id=“attachment_5251861” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] On 4 September, it came to light that IL&FS had defaulted on a short-term loan of Rs 1,000 crore from Sidbi, while a subsidiary has also defaulted on Rs 500 crore dues to the development financial institution, which reportedly forced Sidbi to ask its chief general manager in charge of the risk management department to resign. State-owned LIC is the largest shareholder with a fourth of the firm’s equity, while Orix Corporation of Japan owns 23.5 percent. Other shareholders include Abu Dhabi Investment Authority with 12.5 percent stake, IL&FS Employees Welfare Trust with 12 percent, HDFC with 9.02 percent, Central Bank of India with 7.67 percent and State Bank of India (SBI) with 6.42 percent at the March-end 2018. In a letter to its employees, IL&FS had claimed that if funds worth Rs 16,000 crore stuck with concession authorities were released on time, it would not have landed in this mess. “Our monies were used to fund the cost and time overruns caused by concession authority delays in handing over right of way. “It is our case that if concession authorities released our monies, around Rs 16,000 crore of IL&FS group liquidity and stuck in claims and termination payments, we would not be in the situation that we are in,” IL&FS had said in its letter. IL&FS, which is credited for building the longest tunnel in the country (the Chenani-Nashri tunnel), is sitting on a debt pile of around Rs 91,000 crore and had been downgraded to junk status by rating agencies following the default. Of this, Rs 57,000 crore are bank loans alone, most of which are from state-run lenders. While IL&FS Transport Network, the holding firm of the group’s road assets, has nearly Rs 35,000 crore consolidated debt, IL&FS Financial Services has Rs 17,000 crore of debt, which sits as standard asset for most banks, according to a Nomura India report.