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Kotak-led IL&FS board to discuss restructuring of group entities today

FE Bureau
Kotak Mahindra Bank MD Uday Kotak , il&fs

The IL&FS board, led by chairman Uday Kotak, will meet on Friday to discuss the restructuring of several group entities as per the Reserve Bank of India's (RBI) new norms for stressed assets' resolution, officials said.
"We are trying to resolve some entities under the new guidelines issued by RBI on June 7. Bankers have been working closely with the IL&FS divestment team on over half a dozen entities. The credit evaluation process of these entities is being undertaken," one of the officials said.

Under the RBI's new framework for stressed asset resolution, plans involving restructuring of accounts where the aggregate exposure of lenders is Rs 100 crore and above require independent credit evaluation of the residual debt by RBI-authorised credit rating agencies.

As FE had earlier reported, the board is also working on voluntary liquidation of several small group entities where IL&FS has more than 75% shareholding. "Of these, we have begun work on 10 companies for voluntary liquidation. An expert has been appointed to oversee the process. The board will take stock of it during the meeting and a submission will be made to the NCLT shortly," the official said.

Voluntary liquidation is allowed under Section 59 of the Insolvency and Bankruptcy Code, 2016, provided the company being liquidated can pay its entire dues from the proceeds of assets being sold in the process.
The board on Friday will consider releasing payment to creditors of some of the group companies currently listed in the 'amber' category.

The National Company Appellate Law Tribunal (NCLAT) had given the board time till July 12 for reclassification of these companies. In May, the board had in-principle agreed to reclassify Moradabad Bareilly Expressway as 'green' after secured creditors agreed to reduce interest payout.

Following an order passed by the NCLAT in February, the government-appointed board of IL&FS classified its group companies into 'green', 'amber' and 'red'. The 55 companies categorised as 'green' so far can fully service their debt; 13 'amber' companies can only service their debt to senior secured financial and operational creditors and 82 'red' firms are unable to service their debt altogether.

The financial irregularities in the books of IL&FS came into scrutiny last year after the company failed to fulfil short-term and long-term debt obligations to the tune of Rs 91,000 crore. The resolution process was initiated and in October 2018, the Mumbai bench of the tribunal ordered the suspension of the IL&FS board, to be replaced by a government appointed board.

Kotak Mahindra Bank MD Uday Kotak was appointed the non-executive chairman of the new board, which currently oversees the company.