No bank or financial institution can declare the accounts of debt-ridden IL&FS and its group companies as non-performing assets (NPAs) without NCLAT’s permission, the appellate tribunal said Monday.
A two-member National Company Law Appellate Tribunal (NCLAT) bench, headed by Chairman Justice S J Mukhopadhaya, said this is done in the interest of IL&FS debt resolution plan.
“…we make it clear that due to non-payment of dues by the ‘Infrastructure Leasing & Financial Services Ltd’ or its entities including the ‘Amber Companies’, no financial institution will declare the accounts of ‘Infrastructure Leasing & Financial Services Limited’ or its entities as ‘NPA’ without prior permission of this Appellate Tribunal,” it said.
The tribunal’s direction came after the hearing of an application moved by the government, which is going ahead with plan for the resolution of IL&FS group companies.
The new management of IL&FS is pursuing asset sales to bail out the company and its group entities from its financial mess and pay back to its lenders over Rs 90,000 crore.
During the last hearing on February 11, NCLAT had allowed IL&FS group’s 22 companies, which were classified in the green category based on their financial health, to service their debt obligations.
Besides, it had also approved the appointment of former Supreme Court judge D K Jain to supervise the resolution process of crisis-hit IL&FS and its group companies.
The appellate tribunal also lifted the moratorium and allowed 133 IL&FS firms incorporated outside India to continue with the resolution process.
IL&FS group companies are classified into three groups — green, amber and red — based on their respective financial positions.
The companies falling under green category will continue to meet their payment obligation. While the companies which cannot meet their obligations but can meet only operational payment obligations to senior secured financial creditors are classified as amber.
The red category includes those entities which cannot meet their payment obligations towards even senior secured financial creditors.
