NCLAT allows 22 Indian, 133 foreign subsidiaries of IL&FS to service their debt obligations

The National Company Law Appellate Tribunal Monday allowed 22 Indian subsidiaries of crisis-hit IL&FS group to service their debt obligations.

Besides, a two-member bench headed by Justice S J Mukhopadhaya approved the appointment of former Supreme Court judge Justice D K Jain to supervise resolution process of IL&FS group.
The appellate tribunal also lifted the moratorium and allows 133 IL&FS firms incorporated outside India to continue with the resolution process.

"We allow (companies under green categories) the board to permit the company to service debt obligations as per schedule," the firm said.

The NCLAT was hearing the government plea over the IL&FS group.

Earlier this month, the corporate affairs ministry submitted the debt resolution plan for IL&FS.

The entire resolution process would be based on the principles enunciated in the Insolvency and Bankruptcy Code, as per the ministry.

Under the plan, the government has categorised IL&FS group companies into green, amber and red based on their respective financial positions.

Companies under the green category would be those that continue to meet their payment obligations.

Amber category would be for those companies that would not be able to meet their obligations but can meet only operational payment obligations to senior secured financial creditors.

Amber category entities "are permitted to make only payments necessary to maintain and preserve the going concern".

"Companies falling in the red category are the entities which can not meet their payment obligations towards even senior secured financial creditors," as per the plan.

Such companies would be permitted to make payment necessary to maintain and preserve the going concern status.

Source: Business Today

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