IL&FS likely to settle 55 green cos' Rs 12,000 crore debt by July

New Delhi/ Mumbai: Loan exposure worth Rs 12,000 crore of almost 55 green companies of crisis-hit IL&FS group is likely to be settled by July end, a senior government official said as he asserted that the resolution process is on track. Besides, many of the green companies have positive equity which means that after settling debt obligations, shareholders would "get something in return for their equity stake", Corporate Affairs Secretary Injeti Srinivas said.

The board of diversified IL&FS group, which is estimated to have a debt burden of over Rs 94,000 crore, was superseded by the corporate affairs ministry in October last year. Since then, the National Company Law Tribunal (NCLT)-appointed board is managing the affairs to ensure orderly settlement.

As part of the resolution efforts, the group companies have been classified into three categories, mainly based on their financial positions -- green, amber and red. Srinivas said the IL&FS resolution process is on track and expects to reach "some kind of conclusion" in a time-bound manner.

There are almost 55 companies in the green category and they have a loan exposure of about Rs 12,000 crore. Ten out of the 55 companies account for nearly 90 per cent of the loan exposure, he noted.

Meanwhile, IL&FS Securities Services (ISS) Wednesday moved the Securities Appellate Tribunal (SAT) to direct markets regulator Sebi to annul certain transactions carried out by Allied Financial Services. In February, Sebi had barred Allied Financial and others for misappropriating client securities and a host of other violations.

Appearing for IL&FS Securities counsel Gaurav Joshi said there were fraudulent mutual fund transfers carried out by Allied on behalf of its clients Dalmia Cement and OCL India, among others where it was the clearing house. He sought SAT's intervention to direct Sebi to annul the said transaction, apart from de-freezing of securities which are stuck following the Sebi order.

In February, the Sebi had barred brokerage Allied Financial, its five directors and four other entities from securities markets for misappropriating client securities and other violations. It had also barred them from disposing of or alienating any assets, or create or invoke any charge on their assets, without its prior permission.

The Sebi had probed the alleged irregularities at Allied, pursuant to a preliminary inspection by the NSE had found non-availability of client funds worth Rs 94 crore, non-availability of client securities, non-settlement of inactive clients and non-segregation of transaction between own and client bank accounts.

"In the green category, the major focus is on settling dues with respect to those ten large companies. If the dues of the ten companies can be settled, then 90 per cent of the Rs 12,000 crore can be settled... By July end, we will be aspiring to settle the debt of green companies, which is around Rs 12,000 crore," said Srinivas.

Srinivas also said there are a few cases where creditors are willing to restructure the entire loan to make 'amber' assets green. "We are open to that. If they can be made into green, then around Rs 2,000 to 4,000 crore of debt may shift from amber to green," he noted.

The amber companies have debt obligations worth around Rs 20,000 crore and since there is a moratorium, the dues of these firms are not being paid yet. Amber companies are those that have enough money to pay senior secured creditors but not unsecured ones.

"We are not paying the dues yet, which is being heavily contested in NCLAT by the creditors... If the secured creditors want distribution of available funds before final resolution, they would have to file their final claims. The interim payments made prior to resolution of the corporate debtor, would automatically get adjusted against the final claim," Srinivas said. He said one option could be that senior creditors get precedence and the residual amount would go to unsecured creditors.