NCLAT Clears Insolvency Resolution Of IL&FS Arm
IL&FS, which owns a 42.25% stake in IECCL, is currently selling its shares and has invited bids through the Swiss Challenge method.
The National Company Law Appellate Tribunal on Thursday approved the insolvency resolution of IL&FS Engineering and Construction Co. and delinked it with the other listed loss-making companies of debt-ridden IL&FS Ltd.
The NCLAT clarified that the ICICI Bank Ltd.-led consortium, which is contesting the IECCL resolution, can pursue its objections regarding the complete extinguishment of its debt or the payment related to its 42.25% shareholding in IECCL during the ongoing resolution process.
IL&FS, which owns a 42.25% stake in IECCL, is currently selling its shares and has invited bids through the Swiss Challenge method. A binding bid from a prospective buyer has been received, and voting by lenders is anticipated to conclude by Sept. 30, 2024.
The consortium led by ICICI Bank has opposed the proposal before the NCLAT, where IL&FS has filed an application seeking its permission to sell its stake with a 'haircut' and without shareholders' approval in its companies, which are insolvent with unsustainable debts and placed under the Category II list of resolution framework.
ICICI Bank has opposed the sale of 42.25% in IECCL, contending 100% share capital should be sold to fetch a better value for the company.
Regarding the sale of IL&FS stake in other Category II companies, in which IL&FS shareholding is less than 100%, NCLAT has directed "to list hearing on October 14 (along with) all the objections, including the objections filed by ICICI Bank."
A two-member bench comprising Chairperson Justice Ashok Bhushan and Barun Mitra clarified that 'ICICI-led lenders' consortium shall be at liberty to press for its objection on the extinguishment of its entire debt, or mere payment of 42.25% shareholding of IECCL in the ongoing resolution process."
IL&FS has received a binding bid from a prospective buyer for the acquisition of 42.25% of the paid-up share capital of IECCL held collectively by IL&FS and IL&FS Financial Service (IFIN) under the share purchase agreement.
The remaining 57.75% shareholding of IECCL comprises banks and financial institutions, bodies corporate, trusts, firms, and individuals.
IL&FS, which had a debt burden of Rs 94,000 crore at the time of crisis, is currently going through asset monetisation, a resolution framework approved by NCLAT, which also has a mechanism for the distribution of the sale proceeds.
The resolution framework has divided the sales companies into two categories. Those companies in which bidders are willing to take financial and operational liabilities have been placed in Category I. However, the companies where the financial bid amount offered is lower than their liability have been put under Category II companies.
Last year, it approached NCLAT to seek permission to sell its stake in Category II list of resolution framework.
