The IL&FS Group has petitioned the National Company Law Appellate Tribunal (NCLAT) for permission to divest its stake, without shareholders’ consent, in Category II companies facing insolvency. These companies are burdened with unsustainable debts, necessitating a resolution strategy sans shareholder approval. IL&FS emphasizes that stakeholders, including lenders and shareholders, would inevitably undergo a financial adjustment. This approach aims at ensuring the entity’s revival while aligning with the Insolvency & Bankruptcy Code’s dispensation of shareholder consent.
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IL&FS intends to resolve Category II companies by writing down 100% of their shareholding in exchange for bid proceeds to offset their debt liabilities entirely. However, stakeholders’ objections, particularly from existing lenders and non-IL&FS shareholders, have hindered successful resolutions, as seen in IL&FS Engineering and Construction Company Ltd (IECCL) and Hill County Pvt Ltd (HCPL).
