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IL&FS lenders to receive ₹16,000 crore in Q3

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After a moratorium of over three years, IL&FS lenders will receive an estimated ₹16,361 crore in the third quarter from the proceeds of the resolution of 191 special purpose vehicles (SPVs), said two people with knowledge of the matter.

Alvarez & Marsal and Grant Thornton are advising IL&FS on the bank-wise distribution of the proceeds from the recoveries. IL&FS had informed lenders last week that proceeds would be distributed in the third quarter as against the initial plan of this being done in the second quarter, said one of the persons cited above.

Of the ₹16,361 crore, a sum of ₹11,296 crore will be distributed as a cash payment to lenders and ₹5,065 crore will be given in the form of units of an infrastructure investment trust (InvIT).

The National Company Law Appellate Tribunal (NCLAT), which is overseeing the IL&FS resolution, had approved the distribution of recoveries among lenders on May 31.

Confirming the development, an IL&FS spokesperson said that the “interim distribution will result in funds being made available to creditors of the group which includes banks, financial institutions, pension funds, provident funds, employee welfare funds, insurance funds, gratuity funds, superannuation funds and army group insurance funds among others.”

He further stated that the board is hopeful of interim distribution within the current fiscal, subject to certain conditions.

Lenders’ Financials to Get a Boost

“These criteria are linked to verification of claims or pending litigation in some cases,” a third person said.

IL&FS lenders have sought the distribution of money since it will help them boost earnings. Most banks have fully provided for the distressed SPVs of IL&FS, and thus the proceeds from recovery will be reflected in their financials.

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When IL&FS collapsed in October 2018, it had 347 companies under its fold with a total debt of Rs 94,246 crore. IL&FS had indicated that, of this amount, an estimated debt of Rs 61,000 crore would be recoverable over the next few years. The finance company has undertaken the resolution of 191 group entities through sale, liquidation closure or transfer to the InvIT, which had resulted in cash recoveries of Rs 16,742 crore as of December 7, 2021, according to an application filed by the finance company with the appellate authority.

IL&FS aims to complete the resolution of 249 companies, the same application stated.

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