NCLAT Greenlights Insolvency Resolution for IL&FS Engineering, ICICI Consortium Protests

The NCLAT approved the insolvency resolution of IL&FS Engineering and Construction Company Limited (IECCL) while allowing ICICI-led consortium to contest the extinguishment of its entire debt. IL&FS is selling its 42.25% stake in IECCL and has a binding bid from a buyer. Hearing objections is scheduled for October 14.

The National Company Law Appellate Tribunal (NCLAT) on Thursday approved the insolvency resolution for IL&FS Engineering and Construction Company Limited (IECCL), separating it from other listed loss-making companies of the IL&FS group.

The ICICI-led consortium, which opposes the resolution, retains the liberty to contest the extinguishment of its full debt or the mere payment reflecting its 42.25% shareholding in IECCL during proceedings. IL&FS, holding a 42.25% stake in IECCL, is attempting a sale of its share under the Swiss Challenge method, having received a binding bid from a potential buyer. Voting by lenders is expected to conclude by September 30, 2024.

ICICI Bank has opposed the sale, arguing that selling 100% of share capital would yield better value. NCLAT scheduled further hearings on October 14 to address objections, including those from ICICI Bank. IL&FS, burdened by Rs 94,000 crore debt, is undergoing an asset monetisation plan approved by NCLAT, categorising companies into two groups based on bidders' willingness to assume liabilities.