India's IL&FS submits plan for revival to company tribunal

IL&FS Engineering and Construction

31/10/2018 14:13

* Options include outright sale of group or its subsidiaries
    * New board expects to implement resolution in six-nine
months
    * Company tribunal to hear update on plan Dec. 3
    * 

    By Promit Mukherjee
    MUMBAI, Oct 31 (Reuters) - The new board of India's
Infrastructure Leasing and Financial Services (IL&FS) submitted
a plan to revive the debt-laden firm to a company law tribunal
on Wednesday, paving the way to a potential resolution of the
group's future.
    The Indian government this month took control of IL&FS, a
major infrastructure financing and development company, after it
defaulted on some of its debt, triggering fears of contagion
across India's financial system.  urn:newsml:reuters.com:*:nL4N1WH20Z
    "It is a dream and hope blueprint for revival," Sanjay
Shorey, Director for Legal Prosecution in  the Ministry of
Corporate Affairs (MCA), told the tribunal.
    The MCA is representing the government and the new board at
the National Company Law Tribunal (NCLT).
    "A universe of options are to be explored. There is no
single strategy for revival," Shorey said.
    He said the new board of IL&FS was looking at three
strategies: an outright sale of the entire IL&FS group, sales of
its subsidiaries or assets.
    The company later said in a statement after the tribunal
hearing that the options could broadly involve significant
capital infusion, divestments and debt restructuring at ILFS
group, its subsidiaries and asset sales. 
    The IL&FS defaults have triggered sharp falls in Indian
stock and debt markets amid fears of risk in the rest of the
country's financial sector.
    Earlier in the day, both Infrastructure Leasing & Financial
Services and IL&FS Transportation Networks said they were unable
to service their non-covertible debenture interest payments due
on Oct. 30 and Oct. 31, respectively, due to insufficient funds.
    The string of defaults by IL&FS led to a series of credit
rating downgrades on the company to junk.
    Shorey said the officials appointed by the new board have
found discrepancies on how the previous board and management had
conducted its business. 
    A preliminary analysis of the financial statements of IL&FS
noted that outstanding loans of the company were in excess of
the permissible limit set by India's central bank, Shorey told
the tribunal.
    "The new board is unable to validate whether transparent
process was used by the earlier board to monetise assets," he
added.
    The NCLT told the MCA that the holding company will have to
make all its 346 subsidiaries part of the resolution roadmap
within 15 days.
    The new board will follow due processes in the finalisation
and implementation of the plans and expects to complete the
process, in stages and parts, in the next six to nine months
subject to market and economic conditions, IL&FS said.
    The court will hear an update on the plans on Dec. 3.

 (Reporting by Promit Mukherjee, Writing by Swati Bhat; Editing
by Emelia Sithole-Matarise)
 ((swati.bhat@thomsonreuters.com; twitter.com/swatibhat22;
+91-22-61807353; Reuters Messaging:
swati.bhat.thomsonreuters.com@reuters.net))