NCLAT Greenlights IL&FS's Rs 1,000 Crore Debt Reduction Plan with Strategic Subsidiary Sale

NCLAT approved the sale of IL&FS Paradip Refinery Water Ltd (IPRWL) to a bidder, helping IL&FS reduce debt by Rs 1,000 crore. The sale is part of IL&FS's debt resolution plan, amidst BOOT agreement complications with IOCL. IL&FS had a massive debt load as of October 2018.

The National Company Law Appellate Tribunal (NCLAT) has granted permission for the debt-heavy IL&FS group to sell its subsidiary, IL&FS Paradip Refinery Water Ltd (IPRWL), to a successful bidder. This strategic sale is expected to help IL&FS manage a substantial debt load by enabling a repayment of around Rs 1,000 crore.

The NCLAT ruling comes amid a complex legal and business situation, wherein Indian Oil Corporation Limited (IOCL) had not consented to the sale. IOCL argued that the existing BOOT agreement with IL&FS, which runs until 2039, does not allow for such disinvestment. However, NCLAT dismissed this objection, stating that IL&FS could proceed with the sale under the terms set forth in the resolution framework.

The tribunal emphasized that the successful bidder must comply with the BOOT agreement's technical and operational requirements. As of the latest update, the IL&FS group had significant fund-based debts and was directed to resolve these by March 2025. The resolution involves managing 302 entities, with a substantial portion of debt already cleared by the group.

(With inputs from agencies.)