The beleaguered group IL&FS has informed NCLT that in contravention of an NCLAT order, banks have debited about Rs 759 crore in the last eight months for repayment on their dues which amounts to coercive creditor action.
The beleaguered group Infrastructure Leasing & Financial Services (IL&FS) has informed National Company Law Tribunal (NCLT) that in contravention of a National Company Law Appellate Tribunal (NCLAT) order, banks have debited about Rs 759 crore in the last eight months for repayment on their dues which amounts to coercive creditor action.
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As per the fifth progress report to the NCLT, the company said that banks and financial institutions' actions affects its efforts to survive as a 'going concern'.
"In contravention with the October 2018 order of the NCLAT, some banks and financial institutions have been debiting the accounts of IL&FS group entities of 'Amber' and 'Red' classified ones without authorisation and from the group to service debt obligations payable by the relevant entities," IL&FS said in its latest progress report.
With respect to the cash credit facilities provided by the lenders to the IL&FS group entities, some banks and financial institutions have been even appropriating interests by debiting the current accounts of the relevant group firm on a monthly basis, the update said.
"If the creditors of the IL&FS group continue with such actions the result will be that the 'going concern' status of those companies will be affected leading to disruption of operations and consequent value deterioration," the company told NCLT.
The report said the auto debiting of accounts of the IL&FS group entities have been placed before the NCLAT and the appellate tribunal on August 8 asked the government and IL&FS to bring it to the notice and treat it as "contempt of court".
Under the cost cutting measures, the company said that the new board has achieved the target of reduction of operating expenses for financial year 2018-19 by about 26.22 percent as set by the Fourth Progress Report.
The new board has achieved the target as there has been a reduction of operating expenses by 32 per cent and a significant contribution towards this has been achieved by the office space management , review of operating practices and administrative expenses by 60 per cent, the report said.
Further, the progress report showed that as IL&FS was unable to meet its repayments obligations due to financial mess, the government has also made payments under guarantees issued by it on IL&FS' loans.
The 54 million euro loan from KfW was also guaranteed by the government. After the government paid 0.732 million euro from CFI to KfW the outstanding to KfW as on March is 9.16 million euro.
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