IL&FS board reveals roadmap to pay off 57,000 billion debt
The revised figure represents 57% of total debt; ₹ 50,500 Cr. to be settled by March
Infrastructure Leasing and Financial Services (IL&FS) has announced a roadmap to address 57,000 billion debt of the more than 99,000 crore total credit it had when the Center took over the board for control in October to take over the fraudulent company in 2018.
The current board of directors, led by banker Uday Kotak, said it was likely to run down 50,500 billion yen in debt by March 31, 2021, including the 17,640 billion yen mentioned earlier in June and the rest after that. The debts already addressed include 9,010 billion from the sale of companies, capital payments in green companies, settled debts in non-green companies and the release of NFB limits, as well as an available cash balance of ₹ 8,630 crore at group companies. The settled amount represents 18% of IL &FS’s total external debt.
IL&FS MD SC Rajan said the plan is to settle approximately yen 8,800 billion in debt by the second quarter of FY21, yen 18,000 billion in the third quarter, and over yen 6,000 billion in the fourth quarter. He said the total value of debt incurred would exceed 57,000 crore, including 6,650 crore realized beyond March 2021. “The revised figure accounts for over 57% of total debt and is well above the average realization to date,” for financial creditors under the IBC, “said Rajan. “The remaining debt will be recognized as unrealized and this amount will be the down payment to be borne by the lenders.”
Having started slowly due to the complexity of the settlement process since the takeover on October 4, 2018, the Executive Board expressed confidence that it would achieve its goals despite the prevailing difficult economic conditions triggered by COVID-19.
“The board and management of IL&FS are determined to continue down the path and we will publish a progress report every quarter for transparency,” said Kotak in a video conference.
“We are committed to the roadmap and we will achieve it,” said Mr. Kotak …. Regardless of the external environment, we do our best [to achieve the target],” he added.
Admitting it took time, he said the IL&FS Group’s debt settlement was too complex as it involves a conglomerate of 347 companies registered in India and abroad and such an experiment was conducted for the first time.
“In view of the current situation, what has been achieved is relatively successful,” said the board members
While many companies have been liquidated, the total number of 347 IL&FS Group companies will be reduced to 60 by March 2021 and large holding companies will take longer to wind up.
The board of directors has developed a “group resolution framework,” approved by NCLAT on March 12, 2020, and the company is adopting an approach to distributing revenue fairly.
As part of the resolution effort, IL&FS has proposed the establishment of an InvIT with a target gross value of 13,000 billion that includes 3 special purpose vehicles that have restructured debt of 5,000 billion.
The group is at an advanced stage in completing the sale of 15 companies with a liquidation of nearly 8,500 billion and plans to restructure additional debt of 4,900 billion.