IL&FS, 40 Subsidiaries Move Law Tribunal Seeking to Restructure Debt
Dev Chatterjee
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Mumbai: Debt-laden infrastructure financier IL&FS and its 40 subsidiaries have filed a petition with the Mumbai bench of the National Company Law Tribunal (NCLT) seeking to restructure its debt under Section 230 of the Companies Act, 2013.
The company moved the NCLT Mumbai on Monday “seeking certain reliefs” in connection with filing of scheme of arrangement under Section 230 of the Companies Act, stated IL&FS in a filing with the exchanges. The scheme will be prepared in compliance with applicable laws and subject to necessary consents of shareholders, creditors and boards of directors of the relevant entities.
IL&FS subsidiaries include IFIN, ITNL, IL&FS Energy Development and IL&FS Engineering & Construction Ltd. The other companies include roads and construction companies.
The Section 230 to 240 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 procedural aspects involved, such as format of application to be filed with NCLT, form of notice and the procedural aspects involved with respect to the substantive law are covered under the rules made under Chapter XV of the Act. Section 230-231 of the Companies Act, 2013, deals with compromise or arrangements.
“This is bad news for all creditors, the company and its 40 subsidiaries. By moving the NCLT, IL&FS is seeking more time to repay its debt,” said a corporate lawyer.
IL&FS has to repay Rs 20 billion by the end of September to various creditors, including mutual funds and banks. The company has a consolidated debt of Rs 910 billion.
In a letter to its employees, IL&FS said it would raise Rs 45 billion from its shareholders by way of a rights issue and another Rs 30 billion as emergency funding from LIC and State Bank of India.
By arrangement with Business Standard.
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