IL&FS recovery likely to be Rs 61,000 crore, 62% of total debt

The resolution from the IL&FS group is expected at Rs 61,000 crore of the total debt of Rs 99,355 crore, which is almost 62 per cent, said Uday Kotak, who was appointed the non-executive chairman of the company in October 2018 by the government after superseding the board at that time. The resolution process of IL&FS started three and half years ago after a new management was appointed by the government. Kotak’s term as non-executive chairman in IL&FS will end on April 2, after which managing director CS Rajan will take charge as chaiman and managing director. The ministry of corporate affairs has appointed Rajan as CMD for six months, with effect from April 3. About Rs 21,000 crore of debt has been discharged by way of asset monetisation and debt repayment with public sector lenders being major beneficiaries. “I am happy to say that the maximum money which is being returned is to public sector banks,” Kotak said while addressing the media. “I want to credit the public sector banks, who are normally at the receiving end in most cases, for being smarter. They lent primarily at the SPVs, against security of the assets. They wanted to see the projects, they wanted to see the cash flows,” he said. In addition, the group has nearly Rs 20,000 crore of cash and InvIT unit balance, including Rs 16,000 crore to be distributed to creditors by way of interim distribution post judicial approval. Resolution for another Rs 14,000 crore of debt has been filed with the courts, of which Rs 7,500 crore has been approved and transaction closure is underway. “The debt addressed to date (Rs 55,000 crore) represents over 90 per cent of the overall estimated resolution value. Resolution of remaining Rs 6,000 crore debt will move into FY23,” the company said in a statement. Kotak said the recovery estimates are conservative and that there is a chance that the final recovery is higher than the current estimates. The overall resolution estimate of 62 per cent is double the average recovery of 31 per cent under IBC, according to its December newsletter. “This has been largely possible due to the continued commitment of the New Board and the Management to preserve value in assets of national importance and maintaining going concern status,” IL&FS, which continues to service debt of Rs 1,000 crore across companies, said. Of the 347 entities under IL&FS Group as of October 2018, 246 entities stand resolved, leaving 101 for the next financial year. IL&FS also said an application has been filed with NCLAT for undertaking interim distribution of Rs 16,000 crore of cash and InvIT units available across the group. “Over 75 per cent of this would be distributed to creditors of three large holding companies — IL&FS, IFIN and ITNL — which have a large base of public fund creditors.

This has been made possible on account of IL&FS’ resolution framework and the underlying distribution formula,” the statement said.

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