An earlier plea moved by the beleaguered Infrastructure Leasing and Financial Services (IL&FS) for restructuring under the Companies Act will be withdrawn in the coming days.
On Wednesday, the National Company Law Tribunal (NCLT) in Mumbai granted permission to IL&FS to withdraw its petition moved under Section 230 of the Companies Act on September 25.
Section 230 of the Companies Act is a mechanism that companies can use to restructure their balance sheets through direct talks with their creditors.
The NCLT directed IL&FS’ legal representative, Cyril Amarchand Mangaldas, to file a fresh petition for withdrawal of the original petition.
After the infrastructure-financier defaulted on inter-corporate loans and other liabilities, the previous board had moved the NCLT seeking the tribunal’s direction to insulate itself from Insolvency and Bankruptcy Code proceedings.
But given the systemic importance of the non-banking financial institution, the Ministry of Corporate Affairs (MCA) and the government took over the company on October 01.
As a consequence, the old board was dissolved and a new board of government nominees was appointed by the NCLT under sections 235 and 236 of the Companies Act.
The tribunal asked the new board to prepare a roadmap for turning around the company by October 31.
Total borrowings of the company as of September end stood at Rs 910 billion.
Later on Wednesday, the NCLT will hear the MCAs petition.
According to reports, the new board of directors of IL&FS, along with the government, will present a plan that may either suggest its sale, as a whole or through its subsidiaries separately, or a liquidation and asset monetisation strategy.
Further, the government may offer to inject liquidity to curb any further defaults.
IL&FS requires Rs 350 billion in liqudiity support as it has over Rs 400 billion worth of debt obligations due.