Bad news for creditors as IL&FS, 40 arms move NCLT seeking debt protection

Debt-laden infrastructure financier IL&FS and its 40 subsidiaries have filed a petition with the Mumbai Bench of the National Company Law Tribunal (NCLT) seeking to restructure its debt under Section 230 of the Companies Act 2013.

The company moved the NCLT Mumbai on Monday “seeking certain reliefs” in connection with filing of scheme of arrangement under Section 230 of the Companies Act, said IL&FS in a filing with the exchanges. The scheme will be prepared in compliance with applicable laws and subject to necessary consents of shareholders, creditors and boards of directors of the relevant entities.

IL&FS subsidiaries include IFIN, ITNL, IL&FS Energy Development and IL&FS Engineering & Construction Ltd. The other companies include roads and construction companies.

The Section 230 to 240 of the Companies Act, 2013, contains provisions on ‘Compromises, Arrangements and Amalgamations’, that covers compromise or arrangements, mergers and amalgamations, corporate debt restructuring, demergers, fast track mergers for small companies/holding subsidiary companies, cross border mergers, takeovers, amalgamation of companies in public interest, etc.

Private letter, recent affidavit show Tata-Mistry rift started back in 201

Latest Business News - The rift between Tata Trusts chairman Ratan Tata and ousted Tata Sons chairman Cyrus Mistry began as far back as 2013, the Economic Times reported on Monday citing an affidavit filed by Tata before the National Company Law Tribunal (NCLT).

As reported earlier by Business Standard, Cyrus Mistry had taken the legal route in his fight against the Tatas by filing a lawsuit in NCLT against Tata Sons in late December. According to sources, Mistry's family-controlled investment firms moved the NCLT in Mumbai against Tata Sons. The petition was against oppression of minority shareholders and mismanagement of Tata Sons under Section 241 of the Companies Act, the sources had told Business Standard. 

The affidavit, the ET report added, said that Mistry had not been able to turn around companies such as Tata Steel and Tata Motors, which resulted in a fall in dividends for Tata Trusts. Further, the affidavit stated that contrary to Mistry's claim – that Tata owns a minor stake in Tata Sons, while stakeholders like Mistry's investment firms actually suffer due to losses incurred by Tata Steel Europe – it was the Tata Trusts which held a majority stake in Tata Sons, far in excess of the stake held by Mistry's firms. Mistry's family owns 18.5 per cent of Tata Sons, while Tata Trusts — a philanthropic group of bodies endowed by the Tata family — own 66 per cent of the firm. 

Tata's 37-page affidavit said that the group had "faltered" in its judgement when it appointed Mistry as the chairman.(Read More)