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.

(With inputs from agencies.)