L&T Finance is challenging in the apex court a bankruptcy appeals bench ruling that allowed Rs 16,000 crore of IL&FS debt to be categorised as ‘amber’, arguing that the contract has no room to qualify the stressed financier’s outstanding loans based on solvency.
The National Company Law Appellate tribunal (NCLAT) approved three loan categories – green, amber and red — based on the ability of a particular company to repay debt and interest. L&T Finance has Rs 1,800 crore of d ..
The NCLAT has asked the IL&FS board to ensure that companies with positive cash flow remain as going concerns and that their operations are not disrupted. Money from escrow accounts of SPVs will remain in individual accounts after meeting the operational expenses.
However, all companies of the group that fail to meet cash flow solvency test will remain under the moratorium granted by NCLAT. Approximately, the amount of loan that will fall under the Amber category is Rs 16,000 crore. ..
L&T Finance did not comment on the likelihood of its appeal before the apex court.
L&T Finance has exposure to six road SPVs and all of them are operational. Out of these six, four are annuity projects, where money comes directly from the government: Two are toll projects.
According to the IL&FS resolution framework report, green, amber and red are categories of companies based on their ability to meet payment obligations over the coming 12 months.
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