The National Company Law Appellate Tribunal (NCLAT) on Monday allowed 22 companies of crisis-hit IL&FS group, which were classified in green category based on their financial health, to service their debt obligations.
Besides, a two-member bench headed by Justice S J Mukhopadhaya approved appointment of former Supreme Court judge Justice D K Jain to supervise resolution process of crisis-hit IL&FS and its group companies.
The appellate tribunal also lifted moratorium and allowed 133 IL&FS firms incorporated outside India to continue with the resolution process.
“We allow the boards (of the green companies) to permit them to service debt obligations as per schedule,” said NCLAT.
The NCLAT’s direction came during the hearing over government’s plan for the resolution of IL&FS group companies.
IL&FS group companies are classified into three groups — Green, Amber and Red, based on their respective financial positions.
The companies falling under green categories will continue to meet their payment obligation. While, the companies which can not meet their obligations but can meet only operational payment obligations to senior secured financial creditors are classified as the amber category.
And in the red category are those entities which can not meet their payment obligations towards even senior secured financial creditors.
In an affidavit filed before the NCLAT, the Government informed former Supreme Court judge Justice D K Jain has agreed to supervise the resolution process of the IL&FS group companies.
As per the terms and agreement, Justice Jain will get a monthly remuneration of Rs 10 lakh per month and Rs 2.5 lakh per sitting, besides other expenses, which would be paid by IL&FS.
During the hearing, Solicitor General of India Tushar Mehta appearing for the Ministry of Corporate Affairs submitted a list of 302 subsidiaries of IL&FS, which are jointly controlled entities, group companies and associates forming part of IL&FS group companies.
Out of 302 companies, 169 companies are incorporated in India and the remaining 133 are incorporated outside India, he added. He further informed the NCLAT that out of 169 domestic companies, classification process under Green, Amber and Red categories has been completed for 69 firms as on February 9, 2019.
Out of 69, the Government has marked 22 companies under Green, 10 in Amber and rest 38 in Red category.
Mehta sought permission from the appellate tribunal to allow the ‘Green entities’ to service their debt obligations as per scheduled repayment, to which the NCLAT agreed.
However, over Amber and Red category, the appellate tribunal said that it would pass any order after hearing them in next hearing on March 12.
“We want to know from the government and IL&FS as how they intend to resolve all entities particularly in ‘amber’ and ‘red’ group entities. Whether they would form a Committee of Creditor as normally done in the company insolvency resolution process,” said the tribunal.
It also said that moratorium against them “can not continue for an indefinite period”.
During the hearing, senior lenders such as Indusind Bank, L&T Finance and Aditya Birla & Capital Fund opposed the government’s plea to make the Amber and Red companies to make payment necessary only to maintain and preserve their going concern status.