Mumbai: The estimated recovery of the IL & FS resolution process is around 61% of the overall group debt better than the average recovery of 39% by lenders with the bankruptcy and bankruptcy process (IBC).
According to C S Rajan, MD from IL & FS, the company has managed this through a combination of sales and settlements approved by the court.
Given that there is no legislative regime or regulation to deal with the bankruptcy of groups, the board adopts a multipong approach – depending on the type of asset – by focusing on resolution, restructuring and recovery.
On April 2021 updates, the new board increased the estimated aggregate debt recovery to Rs 61,000 Crore.
This is an increase in RS 5,000 Crore above the previous estimate, and represents a resolution of more than 61% of (overall-based funds based and fund-based) debt group around RS 99,000 Crore, in October 2018.
These include debts aimed at resolution, restructuring and liquidation In 347 IL & FS companies.
At the end of March 2021, of the 347 entities, 186 was completed with RS 43,000 Crore Debt aimed at.
The quarterly newsletter from the Bank’s bankruptcy and the Council of Bankruptcy for March 2021 revealed that recovery through a resolution of around 39%.
And recovery through liquidation is around 4%.
According to bankers, recovery in the IBC process has extreme results.
There are cases such as Essar Steel and Bhushan Steel where lenders return all their money, and others like videocon and jet airways, which are quite close to the liquidation value.
What iBC data is not displayed is a case of one-time completion that occurs outside the bankruptcy process.
In many of these cases, the promoters knew that they could lose everything if their company went bankrupt, which encouraged them to advance for settlement.
IL & FS boards have the advantage of all options, and they are not pushed into situations ‘sales or liquidation’.
For example, in the case of a road project, where conventional investors are spoiled for the choice given by road projects sold, the board decides to go for alternative options to prepare infrastructure investment trust (invitation).
According to Rajan, the resolution framework – approved by the Tribunal National Law – has been designed to optimize recovery for various creditors, including those at the parent company level, where most total group debts.
Industrial sources say that while the new council has discussed a large portion of debt, the challenge is to complete IL & FS financial services and the remaining cases of dozens of companies where the amount involved is relatively small.
In the case of i-fin, the board understood has dropped a plan to sell loans worth Rs 5,000 Crore after the offer comes in the range of 5%.
At 61%, IL & FS recovery can beat 39% IBC
