IL&FS Liquidation: 10 More Subsidiary Firms Are Likely To Be Auctioned

After an enthusiastic response by financial companies and banks to the sale offer of two Infrastructure Leasing and Financial Services Ltd (IL&FS) subsidiaries, the Ministry of Corporate Affairs (MCA) has announced that 8-10 more of them will be auctioned off shortly, reports Mint. The planned sales are part of a turnaround scheme for IL&FS under the Insolvency and Bankruptcy Code (IBC) to meet the company’s debt obligations.

Secretary in the MCA, Injeti Srinivas, spoke to reporters at the IBC conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), stating that, “I understand that expressions of interest for another 8-10 companies will be called for shortly. We are well into the process of sale of subsidiaries as going concerns and (we) will ensure maximum possible realisation (of value) and then meet repayment obligations.”

The government had supplanted the IL&FS board early last month after the company had defaulted on its debt obligations. The company owed more than Rs. 91,000 crore to creditors at the end of March 2018.

The IBC came into effect in December 2016, after which approximately 9,000 cases have been initiated under it till date in bankruptcy tribunals, of which close to half have already been disposed of. Srinivas revealed that 3,500 cases had been resolved even before admission before the National Company Law Tribunal (NCLT), resulting in claims of around Rs 1.2 trillion being settled, and another Rs 1.2 trillion in claims settled under the IBC.

He also credited the IBC with many non-standard loans getting converted into standard accounts due to debtors making good on their delayed payments, ensuring recovery of Rs 45,000-50,000 crore. He estimated that the IBC had directly or indirectly had an impact of nearly Rs 3 trillion.