Aggregate value of debt being addressed is now estimated as over Rs 57,000 crore – with around Rs 50,500 crore likely to be addressed by March 2021
The new board of IL&FS said the debt estimate being addressed in the group’s ongoing resolution process had been revised to well 57 percent of the overall Rs 99,000 crore debt. This is higher than the average realisation, till date, for Financial Creditors under the Insolvency and Bankruptcy Code (IBC) process.
Aggregate value of debt being addressed is now estimated as over Rs 57,000 crore – with around Rs 50,500 crore likely to be addressed by March 2021, the company said in a statement on July 20.
Addressing the media, Uday Kotak, Chairman, IL&FS said, “The government superseded the then Board in October 2018 and set up a new board. Its major shareholders at the time were unwilling to put in capital and IL&FS was rated AAA until it started defaulting in August 2018.”
The statement came as the new board, appointed by the Centre, led by Kotak as Non-Executive Chairman, Vineet Nayyar as Vice Chairman, CS Rajan as MD and Bijay Kumar as Deputy MD, along with other officials – highlighted the key initiatives taken and progress made till June 30, 2020, in a media address.
“Rs 17,640 crore of debt has been addressed so far including Rs 16,084 crore fund based and Rs 1,556 crore non-fund based debt. Of total Rs 99,355 crore debt, we have addressed Rs 17,640 crore of debt,” Rajan said.
He added that termination of projects is another resolution mode the group is considering. “The company is looking to wind up 61 entities with a debt of Rs 278 crore. Besides this, 11 projects – largely road assets, have been identified for termination involving debt of Rs 6,035 crore.”
Further, debt restructuring process is currently on in case of three group companies with debt of Rs 9,382 crore and real estate monetisation for eight entities with Rs 473 crore debt will also to be undertaken.
“We have identified 13 entities with Rs 9,042 crore debt for InvIT (road assets) and 47 entities with Rs 13,531 crore debt will be resolved via monetisation, stake sale,” Rajan added.
As part of the resolution efforts, the InvITs – among the country’s largest with a target gross value of Rs 13,000 crore, will include three SPVs where debt of Rs 5,000 crore has been restructured. The Group is in an advanced stage of concluding the sale process of 15 entities with resolution of nearly Rs 8,500 crore and plans restructuring additional debt of Rs 4,900 crore.
As far as completed resolutions go, Rajan said that 48 offshore entities of IL&FS with debt of Rs 1,048 crore have been resolved so far; while 23 domestic entities of IL&FS have been resolved involving a debt of Rs 4,821 crore. “IL&FS resolution framework is built on three pillars: resolution, recovery and restructuring,” he said.
On the challenges, Rajan said the lack of precedence of group level resolutions of this nature was the key challenge. “The board met 42 times in the last 21 months and took some time to come to grips with the complexity of the issue at hand. When we took over, we were surprised at the size of debt (Rs 1 lakh crore in 2018) and the number of subsidiaries (347),” he noted.
Thus, the new board has developed a unique “Group resolution framework” that received NCLAT approval on March 12, 2020. The framework can form a benchmark for future group insolvencies in the country.“All this would however not have been possible without the help, guidance and support provided by the MCA at all stages in the resolution process as well as the moratorium cover extended by the NCLAT order,” the statement read.