Loan exposure worth Rs 12,000 crore of almost 55 green companies of crisis-hit IL&FS group is likely to be settled by July end, a senior government official said as he asserted that the resolution process is on track.
Besides, many of the green companies have positive equity which means that after settling debt obligations, shareholders would “get something in return for their equity stake”, Corporate Affairs Secretary Injeti Srinivas said.
The board of diversified IL&FS group, which is estimated to have a debt burden of over Rs 94,000 crore, was superseded by the corporate affairs ministry in October last year. Since then, the National Company Law Tribunal (NCLT)-appointed board is managing the affairs to ensure orderly settlement.
As part of the resolution efforts, the group companies have been classified into three categories, mainly based on their financial positions — green, amber and red.
Srinivas said the IL&FS resolution process is on track and expects to reach “some kind of conclusion” in a time-bound manner.
There are almost 55 companies in the green category and they have a loan exposure of about Rs 12,000 crore. Ten out of the 55 companies account for nearly 90 per cent of the loan exposure, he noted.
“In the green category, the major focus is on settling dues with respect to those ten large companies. If the dues of the ten companies can be settled, then 90 per cent of the Rs 12,000 crore can be settled… By July end, we will be aspiring to settle the debt of green companies, which is around Rs 12,000 crore,” he said.
In an interview to PTI, Srinivas also said there are a few cases where creditors are willing to restructure the entire loan to make ‘amber’ assets green.
“We are open to that. If they can be made into green, then around Rs 2,000 to 4,000 crore of debt may shift from amber to green,” he noted.
The amber companies have debt obligations worth around Rs 20,000 crore and since there is a moratorium, the dues of these firms are not being paid yet.
Amber companies are those that have enough money to pay senior secured creditors but not unsecured ones.
“We are not paying the dues yet, which is being heavily contested in NCLAT by the creditors… If the secured creditors want distribution of available funds before final resolution, they would have to file their final claims. The interim payments made prior to resolution of the corporate debtor, would automatically get adjusted against the final claim,” Srinivas said.
Noting that the issue is the distribution ratio between secured and unsecured creditors, he said one option could be that senior creditors get precedence and the residual amount would go to unsecured creditors.
“Another option could be pro-rata across the board. And yet another option could be a pre-determined ratio like, say 85 per cent of the funds get earmarked for the secured creditors and the remaining 15 per cent to be shared by unsecured creditors. This matter would be adjudicated by the NCLAT at the next hearing. We will submit a scheme with a few options,” Srinivas said.
NCLAT is the National Company Law Appellate Tribunal.
While the resolution process is not being done under the Insolvency and Bankruptcy Code (IBC), the ministry is keeping in mind the time frame provided in the Code with respect to addressing the IL&FS matter.
Under the Code, resolution of a stressed company needs to be completed within a maximum time of 270 days from the date of admission.
“Though it is not in IBC, we keep those time frames in mind and try our best to be well within those time frames. The 270 days deadline is fast approaching and we have another 90 to 100 days to reach that. The way we are planning we should be able to achieve quite a bit by then and a significant portion would have been resolved,” Srinivas noted.
IL&FS board was superseded in October 2018.