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L&T Finance to challenge NCLAT order on IL&FS debt in SC

PW Bureau 

L&T pointed out that on the basis of solvency, the contract cannot approve the stressed financier’s outstanding loans New Delhi: L&T Finance will move the Supreme Court against the National Company Law Appellate Tribunal (NCLAT) ruling that permitted Rs 16,000 crore of IL&FS debt to be categorised as “amber.” L&T pointed out that on the basis of solvency, the contract cannot approve the stressed financier’s outstanding loans. Based on the ability of a company to repay its debt and interest, the tribunal approves three loan categories — green, amber and red.

Debt exposure of around Rs 1,800 crore

L&T Finance has a debt exposure of around Rs 1,800 crore to six special purpose vehicles (SPV) of the stressed financier. The tribunal requested the IL&FS board to make sure companies with positive cash flow stay in business and there is no disruption in their operations. After meeting the operational costs, money from escrow accounts of SPVs will stay in individual accounts. “SPV loans getting classified under different categories have no basis in the contract. The company is challenging the NCLAT order in the Supreme Court,” a source with knowledge of the matter said. Moreover, the group’s companies that are unable to come to terms with the cash flow solvency test will remain under the moratorium granted by the tribunal. A loan amount of around Rs 16,000 crore will fall under the amber category, while loans in the red and green list are approximately Rs 65,000 crore and Rs 7,000 crore, respectively.

No projects in red category

“None of our six projects are in the red list. The court and IL&FS have confirmed our view that none of our view that none of our projects will have losses,” Dinanath Dubhashi, MD of L&T Finance, said. L&T Finance made no mention on the possibility of its appeal before the SC.