The institution has so far resolved debt of around Rs 55,000 crore; another Rs 6,000 crore likely to be completed in FY23
India’s billionaire banker Uday Kotak appears to have vindicated the government’s faith in helping clean up the books of debt-ridden IL&FS, which, in 2018, heightened the risk of a systemic crisis of the country’s financial sector, after it went bankrupt for failing to honour debt it owed to banks and other lenders. Nearly three and a half years after Kotak was parachuted in by the government to lead a newly structured board at IL&FS, about Rs 55,000 crore (or 55 percent) of the IL&FS Group’s outstanding debt of Rs 99,000 crore has been resolved. An additional Rs 6,000 crore is estimated to be resolved in FY23, the IL&FS board told the media on Tuesday. The break-up of the Rs 55,000 crore is as follows: Around Rs 21,000 crore has already been paid to the creditors; another Rs 20,000 crore is available in cash or cash equivalent units in IL&FS bank accounts, which needs to be paid back to creditors. The board has given a formula-based application to the National Company Law Appellate Tribunal (NCLAT) for an interim distribution of funds. Another Rs 14,600 crore is resolution-in-progress at the NCLAT. All this means that the IL&FS Group’s overall resolution is estimated at 62 percent—double the average recovery of 31 percent of cases under the Insolvency and Bankruptcy Code, according to their December-ended data. Kotak on Tuesday announced that he will step down from the IL&FS board as chairman after his term ends on April 2. IL&FS managing director CS Rajan will now take charge as chairman and managing director of IL&FS till October 3 this year. “We collectively [as a board] have made a significant part of the journey complete,” Kotak said. Back in 2018, India’s credit markets had been jolted on September 6, when news of a default by Infrastructure Leasing and Financial Services (IL&FS), a sprawling financier of roads, bridges and power plants, was reported by business television channels and newspapers. The parent, IL&FS, ran operations through a web of 347 entities, out of which several were indirect subsidiaries (or SPVs spun off for specific projects).